Hi Joe,

Inline:

At 6/3/10 09:15 PM, you wrote:
Hi Mark! I don't want to belabor the issue. It doesn't make sense to
argue; it is what it is. Let me just respond to your thoughtful points,
though.
> Joe,
>
> Your reasoning sounds great. There are a few "on the ground"
> issues to overcome.
>
> 1) When a long standing pricing model changes, usually the vendor
> feels like they would make more money using that method. It's the
> customer that's paying more.
>
This one I don't get, but the point is that with the old pricing model
Rational was getting zero. That's unsustainable. It would have been
nice if some of the ADTS license could have been siphoned to Rational
and RDi was just bundled in, but that didn't happen.

Rational getting compensated for their software should have been negotiated w/ IBM w/o upsetting the apple cart. The product name *might* not have had to be changed. The ordering process and pricing structure would not have gotten a lot more confusing, etc, etc.


> 2) By your logic, even you would be OK (ROI wise) if IBM charged
> three times the current rate, right? All you need to do is change
> "Does RDP save you 20 minutes a week?" to "Does RDP save you 1 hour a
> week?" to justify it! I don't think that reasoning would fly in too
> many shops.


Actually, that does fly in a lot of shops that pay over a thousand bucks
a head for some of the advanced development tools. Have you priced
RAD? It just doesn't fly in i shops where we've traditionally paid for
our software at least partially by the vast markup on hardware. With
hardware dropping to commodity pricing levels, that margin is gone.

Granted, there are some few shops (usually the larger ones) that can afford and are willing to shell out bucks for decent development tools. My experience in medium to small shops is that if it's a separate, chargeable feature it will undergo scrutiny and they will try to avoid paying for that feature. ("If it's not included, it can't be that important, right?" :-) )

AFAIK, i5/OS is still a lot more expensive than AIX. Is IBM making so much on the AIX services to offset the OS deficit?


> 3) The vast majority of basic development tools from IBM over the
> history of the IBM midrange (at least from the S/34 on, that I can
> think of) were bundled together. When that changes you can expect
> major resistance from the people that hold the keys to the purse strings.

I don't remember it that way. In fact, for the longest time you had to
buy the COBOL compiler separate from the RPG compiler. I could be wrong
on this, but I think bundling is a (relatively) new phenomenon, at least
for the compilers. Not so much for ADTS, although you did pay extra for
things like ADM. Infoprint server is another add-on, isn't it? Even
the new "Open Access" is an additional price product. There's a lot
less bundling going on in the i - back to the future!

You are correct about the compilers, but I was referring to the development tools. The traditional utilities: SDA, SEU, DFU, then later on the /400 PDM were all bundled together. I did mention "basic development tools," which would exclude ADM and Infoprint server. I personally think that it's silly for IBM to charge extra for Infoprint server, since it has probably put a dent in their printing systems hardware sales.

Anecdotal story: I was at a client that was looking to print quite a bit of paper (IIRC, around 50,000 pages in one shot, probably a couple of times a week. They had an IBM Infoprint printer and would have bought another, but since their printing volume was so high, they would have needed to purchase the Infoprint server (highest tier for that product, which is based on printing volume.)

In the end they just ended up going with high volume HP printers. I'm pretty sure the additional software cost was the deal breaker.

No comment (at this time) on RPGOA. Time will tell whether it was a strategic move to charge for it.


> 4) The "one time cost" claim is not really accurate, since unbundling
> allows IBM to directly and separately base maintenance fees on the
> list price, which is ongoing.
>

I was talking incremental cost over ADTS. The bump from ADTS to RDP is
only the one-time cost, because both require the maintenance, right?

When it's bundled, the cost will be spread out over all purchasers, so the bump in price would be minimal. It would follow that the additional maintenance would be negligible.


-mark

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