Re: More anti-midrange propaganda

So......using this logic, why wouldn't IBM sell PC servers and advocate
server farms? There's be a LOT more services you'd sell that way.

In fact, why sell the iSeries at all if this is such a loss leader on
services?

I think that there's more here than Jon's analogy, not to say he's not
right, but I'd imagine there's more to this than just the services end of
it.


Shannon O'Donnell


----- Original Message ----- 
From: "Jon Paris" <Jon.Paris@xxxxxxxxxxxxxx>
To: <midrange-l@xxxxxxxxxxxx>
Sent: Wednesday, September 24, 2003 5:06 PM
Subject: RE: More anti-midrange propaganda


> >> I don't get this argument.  What "lost revenue"?  Show me a simple
> hypothetical calculation showing how revenue is lost when more iSeries
boxes
> are sold.
>
> Interesting that I saw your reaction before I saw my posting!
>
> Don't know what's not to "get" - even IBM admit this simple truth if you
get
> them off the record.  I will do the math - but you'll only argue with it.
>
> Suppose that IBM sell an iSeries to a new customer for (say) $200,000.
Net
> profit from that is (guess) $30,000.  Potential revenue from services is
> probably zero (lots of cheap unemployed iSeries folks).  But even if we
> assume non-zero then it won't be a huge amount of work 'cos the box it too
> darn good.  A pretty high estimate might be 100 hours at $250 an hour -
they
> net (say)$125 per which means 100 X $125 or $12,500 is the net profit.
> Total profit is $30,000 + $12,500 = $42,500
>
> Now suppose instead of the iSeries they sell an RS/6000 for (say)
$150,000.
> Net profit from that is probably about -$10,000.  revenue from services is
> huge (ask Don Rima how much difference there is in workload).
> Conservatively to have someone set up security, install and tune DB2, etc.
> etc. you are looking at 500 hours plus.  So that would be 500 X $125 or
> $62,500.  $62,500 - $10,000 = $52,500.
>
> So to sell the non iSeries box nets them $10,000 more.  The really sad
thing
> is they probably make more if they _don't_ sell the hardware and just
supply
> the services.
>
> Agree or disagree it really doesn't matter.  IBM is in the business of
> making money - they make most of their money through services.  If a box
> doesn't generate much service revenue (e.g. iSeries) they aren't going to
> push it.
>
> Same story applies to all the so-called independent consultants who
> recommend systems.  They will recommend the systems that drive the most
> services revenue.  heck - how else can you explain SAP?  It was designed
> from the ground up to be a pig to install and configure.  By doing so they
> guaranteed the folks who recommended it massive service revenues.  It is a
> sad state of affairs, but I'm afraid it is true whether we like it or not.
>
> Jon Paris
> Partner400
> www.Partner400.com
>
>
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