Re: Prometheus -- MIDRANGE-L

I was talking with a fellow the other day that believes a nationalcompany he knows will roll out 5,000 small i5's. That is a big numberin my opinion. Adding in the impact of annual revenues forsubscriptions, renewals, natural growth, etc and this becomes asignificant revenue stream over many years.






Crump, Mike wrote:

There are a couple more thoughts to think of in this discussion:

1.)  Small is open to interpretation.  $4000 might not be much of price
for a system and you might only make $400 on it.  But 10,000 of those
$400 dollar profits isn't such a small number.  Or 20,000......or
100,000.

2.)  You also need to consider TPOS - total profit of sale.  There are
all kinds of pricing schemes out there.  And companies have rational for
how they do things that can always be justified.  But how often does
someone buy into a smaller machine and then upgrade or replace it in the
future.....?  How many System i customers have not upgraded their
machine?  Added software, added hardware, added services,......  How
many companies start small and then grow over a period of time?

-----Original Message-----
From: midrange-l-bounces@xxxxxxxxxxxx
[mailto:midrange-l-bounces@xxxxxxxxxxxx] On Behalf Of Richter,Steve
Sent: Thursday, June 01, 2006 11:33 AM
To: Midrange Systems Technical Discussion
Subject: RE: Prometheus

why do people think there is no profit in p5 sized and marketed systems?

let's review the profits of some of our competitors:

HP $1.7 billion the last quarter:
http://www.hp.com/hpinfo/investor/financials/quarters/2006/q2.html

Dell earned $762 million the last quarter:
http://money.cnn.com/services/tickerheadlines/for5/200605190858DOWJONESD
JONLINE000583_FORTUNE5.htm

-Steve


-----Original Message-----
From: Trevor Perry [mailto:tperry@xxxxxxxxxxxxxxxxxxxxx]
Sent: Thursday, June 01, 2006 10:56 AM
To: Midrange Systems Technical Discussion
Subject: Re: Prometheus


Larry,

I just realized. Steve does not understand "profit". Since it is going

to behard to teach him the equation of Sales-Costs=Profit, then we are goingtobe unable to convince him that the System p is copied from the System isothey can reduce the costs of p and one day make a profit.


Long live System i.
Trevor

----- Original Message -----From: "Larry Bolhuis"

Subject: Re: Prometheus

I will cut to the conclusion and say the answer is to have i5/os as a
supported OS on the p5 and do away with i5 hardware models, i5 only
business partners, a lot of i5 marketing. <snip>

To steal a line from Red October "You arrogant ass, you've killed US!"
That is, kill all your i5 partners and you've killed the System i.

Many

of us (yes I am one of them) don't do p for a reason: we believe in i.

Better instead to put more arrows in our quiver. With the hardware
essentially identical already why not let us sell more models?

There are not many published numbers to know for sure, but I dont
agree the p5 is a low profit item for IBM.  The $4000 for the lowest
price p5 is still $4000. AIX, Linux and software subscription are in
the $1000 range. DB2 brings in a good profit at $724 for the first
user, $124 for additional users or $4874 per processor. Double those
charges for DB2 on the enterprise ( bigger than 2 cores ) models.

Software monies go other places within IBM. $4000 for a small p cannot
possibly make them significant margins and likely is a loss.

 - Larry