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This e-newsletter has spent the past few weeks delving into the heart of the eServer i5 “Squadron” servers, their Power5 processors, and i5/OS V5R3. This week, I exigency to focus on IBM‘s advertising and earnings draw for the platform. according to the revise brass within the iSeries division, IBM goes to be pushing on a number of fronts to are trying to grow the OS/400 server trade and pump up the OS/400 ecosystem on which it depends.
I recently had an break to talk to Al Zollar, well-known supervisor of the iSeries line, and Cecelia Marrese, vice chairman of advertising and marketing for the iSeries, about what they hope to achieve with the new product line. not that here's necessarily indicative of the health of the iSeries line, however from those conferences i will be able to inform you that they each parade to be much more comfortable and optimistic about the residence the iSeries is and where it is going. here's reflected as a entire lot in body language as in what they spoke of.
Zollar told me that he desired to sustain the iSeries line, now the eServer i5, in the press and within the minds of clients as they dependence platforms. And one factor IBM will carry out to invent this occur is to preserve gigantic iSeries bulletins coming out at a gradual pace and with the newest IBM technologies. “we are affecting away from great bang announcements and affecting on a roadmap where they maintain whatever thing great to assert to their consumers each quarter,” he defined. “this may retain a stage of interest and vitality within the platform.” it will additionally assist with publicity, because the IT exchange press it's consumed by IT people, from gadget admins to chief information officers, will notice a gradual stream of i5 announcements.
but the approach goes far past that. whereas the consideration is good, the premiere form of sales pitch is a aggressive fee for OS/400 servers and their connected software. To that end, as they explained a yoke of weeks ago, IBM reduce remembrance fees with the aid of 20 to 60 p.c and cleave storage prices by 20 %, it dropped the expense of activating Power4 and Power5 processors on the iSeries and i5 line, and famous that it would sustain the benchmark add-ons (such as server processors, memory, and disks) at parity with the pSeries (soon to be “eServer p5”) Unix server line, which has historically had lots reduce listing price tags and plenty better discounts than for the iSeries. while IBM will very nearly under no circumstances proximate the gap on the retail stage (however customers bring in solar Microsystems and Hewlett-Packard with aggressive Unix, Linux, or windows programs), the hollow is considerably smaller, and the enjoyable benefits of the iSeries over the options invent it feasible to promote towards those alternatives. before, the sticky label cost was so high on the iSeries that enterprise companions couldn’t even enmesh their foot within the data core door to invent a pitch. With these fee cuts, which individuals like me maintain been clamoring for considering that the mid-1990s, the facts middle door has opened a crack, and the i5, with its subtle partitioning and varied working system support, has an honest break of in fact compelling CIOs and VPDPs no longer only to open the door but moreover to bring in companions to pitch the computing device to resolve their complications.
IBM has raw the time understood that the box import number for the iSeries needed to continue to be excessive if the OS/400 ecosystem become to now not only continue to exist, but to thrive. And the expense cuts are key to IBM’s draw to raise the territory import number coming out of the iSeries factories in Rochester, Minnesota, and in Dublin, eire.
Of path, with such massive fee cuts for servers, reminiscence, disk, and other core components, this begs the question of how IBM can maintain iSeries hardware revenue, an poor lot much less multiply it. I even maintain argued for years that the OS/400 server market is extra elastic than IBM’s advertising and marketing model cautioned. IBM had its explanations for charging excessive-prices–it necessary the margins as a result of its manufacturing costs had been high, and to benefit pay for its very aggressive fight towards solar and HP within the Unix market, where it's debatable that IBM may moreover now not maintain broken even as it makes employ of pricing as a means of gaining market share.
Now that IBM has huge credibility with the vigor-AIX servers, and solar and HP maintain backed off a bit of on price cuts, IBM has a shrimp more room. (I observed a bit.) IBM moreover has a shrimp bit more space for the judgement that the iSeries and i5 machines bought in Asia/Pacific are actually being inbuilt ireland, the residence labor is cheaper and delivery prices to Asia are decrease. (The pSeries manufacturing for Asia/Pacific shoppers additionally has been moved to ireland, and IBM additionally has a bulk deal with United Parcel carrier to ship from ireland to Asia. This, mixed with a entire lot of tiny adjustments in the provide chain of ingredients that fade into the iSeries, and in how the product is manufactured and delivered, has enabled IBM to enmesh iSeries fees lower.
IBM cares lots about profits growth, however it has at raw times cared extra about earnings boom. So with expenditures on the iSeries essentially cleave through forty % with the i5 launch, can IBM develop revenues and maintain earnings?
The reply looks to be sure. Zollar says that IBM’s draw is to promote more containers, which is obtrusive enough, but that he moreover expects IBM and its companions to be able to sell richer configurations of the boxes. My bet is that the regular promoting price of a territory isn't as low as you may consider, since the mind-set shift from spending as shrimp as viable to carry out the bare minimum of drudgery on an iSeries to spending about the equal amount of cash or a bit extra to carry out a lot more issues with an i5. this is the bet i'd make, and it's naturally the bet IBM is now making. (Heaven assist us all. and that i crave IBM had executed it five years ago.) “I believe there's a major pent up claim for reminiscence and disk storage,” says Zollar.
Marrese says that the eco-friendly vein promotions in late 2000, which eventually led to the revamping of the iSeries line in January 2001, maintain been the 1st step in the transformation of the OS/400 server into a aggressive box. however a beta test in March of this yr for the model 520 and OS/400 specific packaging that debuted in early may additionally seems to were what pushed IBM over the locality to genesis cutting expenditures. Italy, Marrese explained, has a labyrinth of tax laws that invent it painful to hasten a huge enterprise, and that's one of the vital explanation why the country is teeming with little groups. many of these little organizations, it seems, maintain bought AS/four hundred mannequin one hundred fifty and mannequin one hundred seventy servers. and that they just hold using them and don’t upgrade as plenty as IBM would like. within the beta application, IBM took an iSeries mannequin 800, packaged it just like the model 520 express computer (low rate, loads of application, able to hasten out of the container), and located out that if it reduce the rate of this configuration in half, compared with the permeate of edifice it with common iSeries mannequin 800 pricing, it offered twice as many boxes.
a different enviornment that Zollar says he is focusing the iSeries division on is without doubt one of the commonplace drivers of the product line: excessive availability. “on account of the traditionally excessive reliability of the AS/four hundred and iSeries, their valued clientele are very beneath-invested in excessive availability and resiliency.” whereas excessive availability and device clustering utility had been the largest drivers of AS/four hundred and iSeries revenue during the past decade, my guess is that most efficacious about 10,000 of the 215,000 OS/four hundred shops on the planet maintain implemented high availability options. With more affordable and easier-to-use excessive availability utility, and an poor lot cheaper i5 bins, IBM may still be able to invent it up in extent.
Zollar says he has carried out just a few other changes to assist raise income. For one aspect, he famous that the trade is accomplishing out to the legion of little iSeries partners with only just a few dozen money owed to try to enmesh them returned into the online game. IBM is giving dependable coupon codes to companions that buy mannequin 520 categorical configurations in blocks of 10 or 20, and the trade will not promote the new i5 machines direct in competition with its channel, which accounted for roughly 85 p.c of iSeries revenue in 2003, in keeping with Zollar. whereas iSeries revenue boom in 2003 was within the “match double digits” for midrange and excessive-conclusion iSeries machines (Zollar pointed out the number “all started with a two” after I pressed him to nail it down someplace between 10 and ninety nine percent, and my guess is around 25 p.c revenue increase), it's the low volumes of entry machines that has been a drag on both iSeries shipments and iSeries salary. Shipments maintain been flat and revenue had been up 7 % in 2003 across the iSeries line. evidently, getting partners excited about selling the i5 model 520 specific configurations is a key to the brand new approach.
however is not the simplest casual IBM is calling at. Marrese says that IBM booked around $one hundred million in Linux-related iSeries server income in 2003, an component of six larger than Linux income on the container in 2002. She says earnings to support natural eco-friendly-reveal purposes changed into flat or down, and that Domino, excessive availability, home windows integration, and WebSphere are key drivers. but what has Marrese smiling is the arriving support for endemic AIX inside ratiocinative partitions on the i5 machines. because it turns out, just about forty,000 OS/400 purchasers moreover maintain Unix servers in their stores, of which the massive majority are working HP-UX functions. Getting even a percent of those valued clientele to port their HP-UX purposes to AIX and stream them onto the i5 helping each their OS/400 and AIX workloads will fade a protracted pass towards boosting middling iSeries sales.
most likely greater than anything, the timing of the i5 announcement with a restoration within the international financial system is auspicious. Marrese says that, in 2003, iSeries sales in Italy, German, and France picked up, that North the united states started off amazing, and that Asia/Pacific nations like China are exploding (albeit from a very little installed base). “clients had been purchasing to carry out the naked minimum,” she says, “however now they are getting the eco-friendly gentle to expend again.”
IBM is filling in the middle of its vigour 5-primarily based eServer i5 lineup on Tuesday, unwrapping a four-means device geared toward midsize groups looking to consolidate numerous company purposes.
the new eServer i5 550, sandwiched between the fashions 520 and 570, may be accessible in two variants which are new to the i5 500 sequence, together with the solution version and the reduce-end Domino version. The solution edition will be sold collectively via IBM and chosen ISVs to numerous plumb markets.
"The concept in the back of this one [Solution Edition] is to be able to fade to their joint purchasers with the ISVs and offer them an updated solution. Many users may moreover maintain purchased a package a yoke of years in the past and naturally the ISV has made many advancements. this may provide them an break to consume advantage of more recent application along with the new hardware," famous Craig Johnson, the advertising manager for IBM's iSeries line.
The chosen ISVs IBM will be jointly promoting the brand new edition to encompass limpid applied sciences, IBS, built-in Distribution solutions, Intentia, Lawson, long island buddies, MAPICS, PeopleSoft, and SSA world.
both the avow and Domino variations, like the latest benchmark and commercial enterprise variants, hasten below IBM's proprietary I5OS working gadget. They each additionally forward with titanic Blue's Virtualization Engine capabilities that permit clients to hasten AIX and Linux operating programs in partitions as well as to connect and/or manage Intel-based mostly servers.
Some clients seemed to be enthusiastic concerning the new choices.
"We deem this does a superb job at offering more of a total solution, where they are able to deliver existent enterprise value to their clients that helps them obtain their enterprise dreams," famous Muditha Karunatileka, executive vice president of revenue for Sirius computer options.
The mannequin 550 is fueled via a 1.65GHz Power5 processor, can aid as lots as 64GB of memory, and as a Great deal as 38TB of disk storage. The system is distributed with two processors became on with users able to switch on the different two processors as their workload requires.
also on Tuesday, IBM is announcing it will benefit Linux on its Intel-based integrated xSeries Server series.
"That [Integrated xSeries Server] collection has supported home windows for a while, however they vital to position Linux on them as smartly. They deem it's going to complement Linux running on their power processors and partitions, so now they are going to maintain both environments to present corporate clients," Johnson mentioned.
lastly, IBM is unveiling a brand new piece of its Virtualization Engine, called the IBM Director Multi Platform. An more advantageous version of the company's Director product, now purchasable on its Intel-primarily based xSeries, the Director Multi Platform has been superior to control each Intel- and I5OS-based environments.
"This means that you can maintain just one instrument to fade out and bring together inventories of your servers, set up displays for them, and activate alerts to consume automated movements," Johnson referred to.
users who purchase the brand new device with IBM's I5OS bundled enmesh hold of a free replica of Director Multi Platform, Johnson spoke of.
The mannequin 550 might be available genesis Sept. 10 with the generic version going for $74,000.
massive Blue will debut its eServer i5 550, an iSeries machine it created to serve midsize groups and to bridge the gap between its Power5 eServer i5 520, which has two processors, and its i5 570 model, which offers sixteen processors. those two machines, which moreover consist of the Power5--IBM's latest excessive-conclusion server processor that packs two processor cores into one chip--got here out in may.
The eServer i5 550 changed into designed to benefit midsize groups, usually agencies that invent employ of a yoke of hundred to as many as 1,000 laborers, through running their faultfinding computer programs for jobs corresponding to order entry, stock tracking or e mail.
IBM says that its most basic i5 550 server configuration, which prices about $seventy four,000, comes with two of its 4 processors "turned on" and includes a license for IBM's i5 operating device. It moreover includes software that enables the server to hasten distinctive IBM working methods, such as its AIX, and moreover to control further servers that employ Intel hardware and hasten Linux or home windows working systems. the primary i5 550 servers will ship next month.
by including four processors but handiest turning the primary two on originally, IBM is letting clients pay for only what they want up-front and giving them the alternative of boosting efficiency sooner or later. The manner of "turning on" the third and fourth processors basically helps organizations draw forward, referred to Craig Johnson, IBM's iSeries server advertising manager, even though IBM moreover requires a price of about $3,seven hundred to eddy each additional processor on, and groups are required to license extra copies of their favored operating methods per processor as smartly.
despite its potential to tackle working a company's e mail or order-entry gadget, the i5 550's $74,000 initial rate tag could look sheer to a few. IBM counters by using announcing that the machine can moreover be purchased in a considerable number of bundles, a few of which can permeate under $seventy four,000. in the meantime, the 550 can moreover hasten varied operating systems concurrently, permitting it to carry out the job of many different servers as well.
IBM aids in that assignment by pass of including, at no further cost, applications such as its IBM Director Multiplatform, which is designed to support out enterprise IT group of workers by enabling the i5 550 to manage Intel servers running Linux or home windows. freeing up IT personnel contributors capability they could drudgery on other initiatives, Johnson noted.
"customarily the hardware is the smallest piece of the can permeate of a gadget," he mentioned. accordingly IBM goals to assist valued clientele by pass of "attacking the huge items of their (IT) fee, which is application plus people. it be about getting those individuals to carry out stuff besides babysitting a server farm."
meanwhile, massive Blue will offer paraphernalia deals, such because the i5 550 Domino edition, designed for consolidating a Domino e mail paraphernalia onto an i5 550. The Domino version will can permeate $fifty six,000 and are available with two processors grew to become on. IBM will moreover promote a number of avow edition i5 550s, starting at $206,000, which encompass the i5 550 itself, together with IBM features and application applications for jobs like trade useful resource planning.
thus, given the i5 550 server's aptitude to operate distinctive projects on the same time and additionally exploit other servers, it could exchange the exigency for huge numbers of less-costly servers, Johnson observed.
despite the fact IBM's Power5 servers are considered stout performers through analysts, IBM's closest rivals, together with solar Microsystems and Hewlett-Packard, aren't ready to cede the high-end server market to titanic Blue.
sun is hoping to win greater takers with machines in accordance with its UltraSparc IV processor and its Solaris operating device. in the meantime, Hewlett-Packard continues to present more than a few servers in response to its own PA-RISC and Alpha chips in addition to on Intel's Itanium server chip.
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mp;A: iSeries GM Borman to Focus on i5/OS Sales
Mike Borman, the new generic manager of the eServer iSeries business, started out in 1977 at IBM as a programmer after getting his degree in computer science. He eventually held the legendary position of an IBM Systems Engineer before affecting into OS/400 and Unix sales, marketing, and then several generic manager positions. Who is Borman, why is he running the iSeries business, and where is he going to consume the OS/400 platform?
With this appointment, Borman has been the generic manager of both the AIX and OS/400 server units and has moreover been a generic manager for IBM’s PartnerWorld reseller channel. He moreover left IBM for a few years to hasten a software company (Blue Martini Software) during the dot-com bubble, but came back to titanic Blue to hasten PartnerWorld. When you add raw of his engineering, sales, channel, and management undergo up, it is limpid why Borman is qualified to hasten the iSeries business. Read this interview and notice for yourself.
Timothy Prickett Morgan: I know that as they carry out this interview, IBM is in its restful term before it announces its third quarter financial results and I know that you are fairly new to the generic manager position, but can you give us a sense of how the new eServer i5 machines are being received by the market?
Mike Borman: I spent the first yoke of months in this new job doing a lot of traveling, mainly to enmesh out and meet with customers. I’ve been raw around Europe and the United States meeting with customers–I haven’t made it to Asia yet–and I will uncover you that the reaction overall has been extremely positive. And I will uncover you why.
No matter what benign of server you are talking about, there is always concern among customers about how viable the platform is, and customers mainly deem about the underlying hardware technology when they are expressing their concern. The zSeries customers worry about that in inevitable years, the iSeries or pSeries customers carry out in others. Everybody is always worried about the viability of their platform. When they came out with the new Power5 “Squadron” technology, and customers understood raw of the performance and reliability associated with it as well as some of the dapper features like virtualization, I deem iSeries customers are relieved and delighted that they maintain this state-of-the-art technology that is better than anything Hewlett-Packard, Sun Microsystems, or anybody else has in the marketplace.
Customers maintain to fade to a new operating system to employ the Squadron servers, and they are raw trying to motif out if this is an facile job or a arduous job. They are trying to motif out how soon can they and should they enmesh there to consume advantage of the new technology. Without going into any numbers, as I talk to customers, my fervor is that the customers in generic maintain a stalwart acceptance, mentally, for the new technology.
TPM: Over the past several years, with the consolidation of the pSeries and iSeries lines, one of the things I heard time and time again is that the consolidation in some measure meant that the OS/400 platform was going to fade away. What I maintain tried to communicate is that no matter what server IBM ships, there will always be something that can hasten OS/400 and its RPG applications, and that this should be a comforting idea. The volume economics of having a consolidated line ensures that there is a greater–not lesser–probability that the OS/400 platform will be around for a longer term of time.
At the same time, they maintain seen the installed basis of OS/400 shops decline since the peak in 1998, and it has gone down considerably. People bicker about the numbers, but the shape of the curve is something that I deem everybody agrees on. Although they maintain seen a shrimp bit of growth in the past year, it was modest. What is it that you can carry out to try to convince these customers that are still worried about the longevity of the platform and prove to them that it can, in fact, grow? A growing installed basis is was attracts independent software vendors to support the box. Or is IBM’s strategy to maintain a box that can support OS/400, AIX, and Linux is enough to sustain ISVs interested?
MB: I don’t maintain raw the facts perfectly memorized, but from what I’ve been shown, the attrition rate of this iSeries brand is not that high–it is less than two percent in a given year. So it is not as if the people are abandoning the platform at a Great rate. At the same time, they carry out enmesh thousands of new customers each year. So I deem they exigency to grow faster than they are growing, clearly. I maintain never been in a brand or a company where I was growing as hasty as the company thought I needed to grow.
We exigency to carry out better, and you hit on two areas that are important. For the existing customers, they are pleased to enmesh the new technology and they maintain improved price/performance by 40 to 60 percent. That’s a huge price/performance improvement. They are moreover pleased that they can hasten multiple workloads. raw of those Intel-based servers out there in their companies that are doing mission-critical file, Web, or firewall serving can now be brought into the iSeries, and some customers are starting to carry out that.
To consequence it simply, they maintain a two-prong strategy. enmesh the current ISVs on i5/OS V5R3, and enmesh new workloads on top of that ISV base. They maintain over 200 Linux applications, for instance, that can now hasten on the iSeries.
TPM: In general, how titanic is that vigorous basis of iSeries ISVs?
MB: They maintain an i300 and an i3000 program to drudgery with ISVs. The first works with the top 300 ISVs, who they are in contact with on a continuous basis. The i3000 group is a new initiative to build the program that is underway, perquisite now, as you and I are talking.
TPM: I’ve known a lot of the generic managers of the AS/400 and iSeries divisions over the years, and they raw maintain different styles and approaches. Given your background, what are you going to carry out the same and what are you doing to carry out differently as a generic manager of the iSeries line?
MB: I can remember back when Bill Zeitler was the generic manager of the AS/400 back in the mid-1990s. I picked him up at O’Hare Airport when I was the locality manager in the Midwest, and he and I drove down to Caterpillar together to invent an AS/400 call with the CIO, who I knew pretty well from my job in Chicago, and then they drove back and he got on the plane and left. I knew Bill, and the GMs before him–John Thompson, Steve Schwartz. I know that I am not any better than any of them, but I carry out know that each one of them brought a lot to the brand based on their background.
If you watch at my background, most recently I was in the channel, and as you know, trade partners are Important to the success of the iSeries brand. Buell Duncan and Tom Jarosh moreover had that background. Jarosh managed IBM’s Unix business, just like I did for a while. I was probably in sales more than any of the prior generic managers. I moreover spent four years in Asia, and controlled IBM’s SMB initiatives and channels there. I ran the SMB trade when I came back to the States, too. I deem that my sales experience, and linking particularly into the IBM SMB team, will be important. This brand was built on the teamwork of the entire IBM Company, not just the brand sales guys. One of my key responsibilities to the brand is to invent sure they maintain a Great partnership inside of IBM.
TPM: IBM made a conscious selection in 1988 to maintain the OS/400 platform pushed through the confederate channel rather than on a direct basis. While IBM controls a lot of very great OS/400 accounts and has done some direct sales for smaller iSeries configurations on the Web, IBM has increasingly relied the trade confederate channel to shove sales. Is there a judgement or a pass to boost i5 sales and multiply the penetration in the market by affecting to a direct sales model? Is it just a foregone conclusion that the channel is the pass to carry out raw i5 sales?
MB: I wouldn’t voice that the channel is the pass to carry out raw i5 sales. When I was back in Chicago, I would sit down with one of their AS/400 specialists, and she once showed me her 89 sales opportunities that she was working in her territory, which was basically a yoke of suburbs of Chicago. There was no pass that she could cover these 89 customers.
So she had a set of partners engaged on most of those deals, and that is the pass I like to deem of it. I deem of the partners as leverage in the marketplace, and they are moreover the ones that maintain the solutions customers want. IBM doesn’t create application software, so I desperately exigency partners that carry out and, incidentally, partners that can sell or confederate with others who can sell the i5 hardware.
There will never be a point where their partners will carry out raw of the i5 sales. They exigency a brand sales specialist team, engaged around the world, which they currently maintain with proximate to 1,000 people. But they feel that you can always enmesh more leverage using partners. If I sold Boeing 767 aircraft, I probably would not maintain a confederate channel. But when I maintain an installed basis of over 400,000 OS/400 machines in the world, each with upgrade potential, there is just no pass I can cover raw of those opportunities without using partners.
TPM: While this has been IBM’s strategy with the AS/400 and iSeries, at the low proximate of the X86 server market, companies who want a server that is in roughly the same server processing capacity as the entry i5 Model 520s fade and buy it directly and install your own software. I am trying to motif out, for the low-end i5 machines in particular, is there a pass to fade direct which boosts the volumes high enough to invent it feasible to create a lower-cost i5 platform. I am worried, as you are, about the number of i5 boxes that forward out of Rochester. Volume is the faultfinding determinant in the IT industry. I don’t know that the trade confederate channel can absorb and shove more iSeries and i5 iron than they maintain already been doing. It strikes me that they are running as hasty as they can to sustain trained on the newest technologies and chase the accounts that they can, but the partners are a limiting factor.
MB: I would voice that one of the Important things for partners is that they maintain more selection in what to sell than they had five or six years ago. I deem they could sell a lot more iSeries, and I maintain told them that. Six years ago, Intel servers were not that competitive and neither was Windows NT. And today, smart people still don’t want a lot of Windows. But Windows hardware and software maintain improved, and so has the pSeries. So partners maintain more selection on what to sell. It is really Important for me and for the brand to be able to differentiate on why i5/OS is the best selection for customers.
If I thought I could enmesh i5/OS similar in terms of usability and understanding and image in the marketplace as its competitors, then I could fade to more of a volume play. But perquisite now, my view is that i5/OS is more of a shove product, where you maintain to sell the features and function, compared to Windows, which is a drag product.
TPM: Which brings me nicely to my next question. Most OS/400 shops–somewhere in the neighborhood of 85 percent of them by some estimates–have multiple Windows servers running side by side with their AS/400 and iSeries machines. Given that IBM is already working with Microsoft to create a hardware abstraction layer to hasten Windows on the next generation of xBox game machine, which is based on PowerPC chips, one of the things that IBM could do, is enmesh Windows running natively on ratiocinative partitions on the i5s. This would allow customers who maintain external Windows boxes–customers who by and great carry out not want to invent the jump to Linux–to ride their Windows boxes under the skins of the iSeries but maintain the flexibility of dynamic ratiocinative partitions.
This is a thought experiment. Does it invent sense to consequence endemic Windows on the i5, and as a generic manager of the iSeries Division, can you invent it happen.
MB: Nothing that I maintain seen shows that they are working on running any Windows software on Power servers.
I maintain to be honest with you. I maintain been thinking about it in the contrary way. I maintain been trying to motif out where I can sell a lot of i5/OS. Clearly their Power technology is the best in the industry, and the combination of Power and i5/OS is perfect for these customers. I maintain to motif out how to pump up i5/OS volumes, not just sell more i5 hardware.
TPM: I agree. But, just to play devil’s advocate, the funding money to shove i5/OS might forward through a titanic boost in i5 hardware sales that is enabled by Windows partitions.
MB: I will consume a watch at the idea. Of raw of the things that I maintain been working on, that has not forward across the radar screen.
TPM: Let’s revisit that other dependable point you just brought up. What practical steps can you consume to boost the number of i5/OS licenses you sell?
MB: If you watch at some of the skills that they maintain provided to their sales people and their partners in the past few years, they maintain been more geared toward technology as opposed to talking about the features and functions associated with the Great i5/OS operating system. One of the things they are currently working on is getting their territory sales obligate and their partners trained on what differentiates i5/OS from alternatives in the marketplace.
TPM: Is there enough of a differentiation? Back in the late 1980s, when the AS/400 came out, Unix was just getting rolling in commercial environments and Windows did not exist. OS/400 had a lot of stuff back then that made it exceptional, and IBM sold $4 billion to $5 billion a year in servers, storage, and operating systems associated with the platform. As Unix came on stalwart in the 1990s and Windows got traction, driving down prices on raw midrange servers, OS/400 server sales started to decline a bit, and bubbled some in 1998 with the Y2K issue. OS/400 server sales maintain been on a decline since that time. I realize that piece of that decline has to carry out with shifting sales to the channel and price/performance increases as well as weakening sales volumes. But I worry that the feature and total cost of ownership (TCO) differentiation that OS/400 enjoyed 15 years ago is not as strong. Windows is pretty dependable now–even if it isn’t great–and it has a lot of applications and inexpensive hardware. Moreover, they are programming at a much higher smooth with Java-style coding, which insulates programmers from system complexity much as RPG and integrated DB2/400 did with OS/400.
It seems to me that IBM needs to quantify this TCO, and demonstrate that running an identical set of applications on i5/OS and other platforms will result in the i5/OS shop having fewer administrators, fewer security headaches, better uptime, and what maintain you. They raw know this anecdotally, but no one really puts arduous numbers on this TCO argument. Anecdotes carry out not sell servers; data does.
MB: I deem you are perquisite on target. As a matter of fact, I just brought in my worldwide sales team in the past two days. My entire team was there, and they talked through what was going on in the market and what they need. And they had several discussions on total cost of ownership, and they want to enmesh more current TCO data out in the field’s hands because this is an Important component to the i5/OS platform.
When you talk about integration, when you talk about ease of use, and when you talk about the entire value proposition of the box, it is there. It’s real. People know that i5/OS is easier to install, use, and manage than Linux or Windows. But they know they exigency the TCO dispute because they are more expensive. So they are going to enmesh some studies done to prove this perquisite away.
TPM: As generic manager of the OS/400 platform, the OS/400 community has a high smooth of expectations for you. What are the limits to your power, particularly in an eServer-centric server world? The differences between IBM’s platforms are more subtle now, and they share a lot of technologies. Just how much can you quake up the i5 business? I don’t deem you maintain a lot of maneuvering room, but I deem that the OS/400 customer basis thinks you do.
MB: As far as limits go, I deem they always carry out what is best for the customer. I don’t deem they maintain any limits when it comes to satisfying customers. Given that their CEO, Sam Palmisano, and the guy I drudgery for, Bill Zeitler, both maintain had a lot of personal involvement with, a fervor for, and a long-term understanding of this platform, they maintain given me raw of the support that I exigency to invent sure that the i5 thrives out in the marketplace. There are no two better people in the world to support me than Sam and Bill, and they maintain both given me stalwart support from the day I was announced in Rochester as generic manager. I maintain raw the support I exigency inside IBM.
I deem that if there is one thing that I will certainly do, it will be to tap their customers to support what they want to enmesh done as well. I view their customers more as partners than I notice us in a established vendor-customer relationship with them. They are the most passionate, loving, satisfied group of customers that you can maintain in almost any industry you can imagine. My goal is to listen to their customers and to carry out what is perquisite by them.
While buyers are increasingly turning to x86-based servers, IBM is affecting to shore up sales of its iSeries boxes.
The company announced terminal week that it will try to multiply by 10 times the number of independent software vendors developing applications for the mid-market line, which runs
on the Power5 processors and the i5/OS, AIX and Linux operating systems.
It has promised to expend up to US$50,000 in consulting and co-marketing services for every ISV under what it calls the iSeries Initiative for Innovation program.
IBM estimates there are 60 companies in this country writing applications for the line.
It’s an expansion of a limited program started to boost sales of the server which started two years ago, said Barry Pow, iSeries product manager at IBM Canada. There was success, so the company decided to formalize and expand it.
“”We realized if we’re going to notice growth in the iSeries platform they needed not just to reckon on their existing customer and platform set, they needed to enmesh into new areas,”” he said.
Canada is one of the best markets for iSeries in the world, according to IDC Canada. terminal year it accounted for 5.4 per cent of raw server sales in this country, one of the highest levels in countries where it is sold. By comparison iSeries accounted for only 3.1 per cent of server sales in the U.S. in 2004.
However, even here sales are slipping: In 2003 the line accounted for 7.6 per cent of raw server sales.
That’s why IBM’s ride to entice ISVs and toolmakers to iSeries was praised by IDC Canada hardware analyst Alan Freedman.
“”Without taking that tack they’re inanimate in the water,”” he said.
Also enthused was David Harty, director of sale and marketing at Silverblaze Solutions of Markham, Ont., a CRM developer which until recently focused on iSeries customers.
“”It’s nice to notice them re-investing in the trade confederate community,”” he said.
He was particularly pleased partners will be eligible to receive up to a 70 per cent discount for co-advertising with IBM in industry media to benefit ISVs gain customers.
“”That’s something I haven’t seen enough of,”” he said. “”I deem IBM has to quake things up from a co-marketing standpoint. A lot of the programs are relatively pedestrian.””
To convince ISVs are staid about the platform, IBM has created a charter to outline what it calls its “”enduring and future commitments”” to iSeries.
– an applications innovation program, offering free application development assistance either online or from an IBM Innovation Centre;
– an tools innovation program, to benefit ISVs understand and employ tools from some 60 vendors for developing iSeries apps
– co-marketing opportunities;
– and expanded access to PartnerWorld Industry Networks, which offers ISVs advice on technical, marketing and sales issues.
Pow suggested the company has ambitious goals from the initiative.
“”Just as they saw double digit percentage [increase] of their sales in 2004 being tied to new applications and new customers coming to iSeries, they maintain that same objective in 2005,”” he said.
IBM Corp launched two specialized versions of the iSeries platform in September 2003 that were aimed at lowering the cost of both high availability and catastrophe recovery at OS/400 shops. The first box, called iSeries for high Availability, is a specialized OS/400 server designed to hasten as a target machine in a high availability cluster. The second box, iSeries for Capacity BackUp, is designed as a catastrophe recovery machine.
Both machines are meeting sales targets in the first year, according to IBM sources.
As the name suggests, the iSeries for HA machines are full-blown servers designed to be used as auxiliary hot-swap machines for customers that hasten one of the high availability software packages from DataMirror, iTera, Lakeview Technology, Maximum Availability, Trader’s, or Vision Solutions.
For years, IBM and its high availability partners maintain been giving out special rebates on hardware for companies that buy HA software and a new OS/400 server to support it, and the iSeries for HA box more or less made these deals a permanent thing by turning a promotion into a subset of the product line. The permanence of the iSeries for HA boxes is an Important thing for customers. The rebates that IBM has traditionally given add up to that customers maintain to first lay out cash and then wait to enmesh it back to acquire a discounted box aimed at supporting an HA cluster.
The iSeries for HA products are designed to protect production OS/400 servers against outages related to planned downtime (during upgrades and data archiving, for instance, when systems maintain to be taken offline) and for unplanned outages (usually caused by software crashes or human error). IBM announced five different iSeries for HA machines: one Model 825, two Model 870s, and two Model 890s. In March, after receiving requests from customers who didn’t exigency such great servers, IBM expanded the iSeries for HA line to involve a Model 810 server.
While IBM launched the new Squadron Power5-based eServer i5 machines in May, it did not roll out eServer i5 for HA editions until the proximate of July. Specifically, IBM has two versions of the Model 520 and four versions of the Model 570 that maintain been given the HA designation, along with the related price breaks, which cleave roughly one third off the list price of the iSeries or i5 box. Customers negotiate the price down from there, of course.
The Important thing about the iSeries and i5 for HA servers is that they are existent OS/400 servers, and they are absolutely intended to be used as a rollover machine in the event of a system outage. They hasten OS/400 Enterprise Edition and maintain the aptitude to support 5250 workloads for the number of processors activated in the boxes. For the i5 versions of the machines, the servers support AIX and Linux in ratiocinative partitions, the full Virtualization Engine virtualization features (including micropartitoning), and maintain raw of the capabilities of a regular OS/400 server.
They even maintain upgrade paths into regular i5 servers: first you pay to transmogrify the i5 for HA machine to an i5 machine running i5/OS V5R3 Enterprise Edition (presumably the cost of such an upgrade is the contrast in price of the machines) and then you can upgrade further up the i5 line using established upgrade paths.
A variant on this theme, geared more for catastrophe recovery than high availability, is the iSeries Capacity BackUp, or iSeries CBU. Rather than being a machine that is intended to be used in a rollover situation for high availability, the iSeries CBU is intended to be used as a remote machine in the event that a catastrophe (either natural or man-made) wipes out your data center or otherwise knocks out your OS/400 servers.
The iSeries CBUs, announced a year ago with the iSeries for HA boxes, maintain a minimal amount of processing capacity turned on – just enough to hasten the replication software necessary to sustain applications and data in lockstep with the production machine. In July, IBM announced a unique i5 Model 570 CBU machine. It is unclear whether the company plans to launch smaller ones based on the two-way Model 520s and four-way Model 550s, or larger ones based on the Model 595s.
The iSeries and i5 for CBU machines maintain much lower price tags than regular iSeries and i5 servers, and their prices are significantly lower than even the iSeries and i5 for HA boxes. That’s because they maintain a lot less capacity activated than the iSeries for HA boxes. In the event of a disaster, you activate that remote iSeries or i5 machine and start running your workloads on it.
During a catastrophe – the river floods and takes away your data center – you can activate raw of the processing capacity in the CBU box to support your workloads. However, adding main remembrance and storage is not free during this catastrophe (even though they can be added on demand), and after a catastrophe is over, you maintain to pay employ fees for the activated processors in the box. By IBM’s definition, a catastrophe is something deplorable that lasts for more than four hours and can only be recovered from at the remote location; a deplorable remembrance card or a software crash does not qualify. With the Model 570 CBU, you maintain 42 processor days to test your catastrophe recovery procedures free of charge, and IBM recommends that you do.
These HA and CBU servers maintain been on the market for a shrimp more than a year, so how are they doing? Steve Finnes, enterprise server and technologies segment manager for the iSeries Division, and the person who steers the high availability initiatives in the iSeries market, says that he had a inevitable target in intellect when the boxes were launched and that the machines maintain hit that target. While Finnes was not at liberty to give exact box counts for the machines, he did offer some insight into who is using them and why.
According to Finnes, there are about 4,000 OS/400 shops worldwide engaged in existent high availability (meaning they are looking for 24/7 availability for their production systems and maintain paid for secondary systems and HA software from one of the seven vendors). While IBM has never been specific about how many OS/400 server shipments HA software drives every year, it is obviously a major component of the marketing effort, in terms of the revenue it drives, even if the box import is relatively low and the share of the customer basis (by my math, it’s about 2% of the OS/400 base) is fairly small.
Not everyone who gets HA today will buy an iSeries or i5 for HA box. Sometimes, rather than upgrade their main production server, customers sustain their existing box and employ it as a target machine in an HA cluster, and then buy a entire new box. So, for instance, a customer might sustain its Model 870 as the tropical spare and buy a new Model 570. However, doing so means upgrading the operating system on the older box (which is a hassle) or not upgrading in order to sustain it in lockstep with the production machine (which is moreover a hassle).
Finnes says that customers are coming to the conclusion that it is often easier to just buy two boxes that are the same, one regular version and one HA version that matches it. In fact, he says that of raw the HA-related iSeries and i5 sales IBM has done this year, the iSeries and i5 for HA boxes are accounting for anywhere between 15% and 20% of iSeries hardware sales. Considering that the product is fairly new and is offered at a discount, compared with regular iSeries and i5 servers, this is not bad.
While not committing to any future targets (at least not publicly), Finnes says that the rate of shipment for the HA variants is accelerating on an exponential curve in recent months, matching the ramp of the i5 servers themselves. Given this, he is hopeful that IBM can sell a lot more i5 for HA boxes. Finnes says that IBM sold as many i5 for HA boxes in October as it sold in the prior three months.
The iSeries and i5 CBU servers, while having a lower price tag, look to be a harder sell at the moment. Finnes says that the iSeries or i5 for HA servers outsell the CBU servers by a ratio of 10 to one. If you are really staid about high availability, then you are staid about role swapping between servers, and that means the CBU is not a dependable fit. Most companies are more worried about the planned and unplanned outages and how to maintain 24/7 operations; they want this first, it seems, and then they will worry about the disasters and the resulting downtime they can’t control.
Because running HA software across a data center and a very remote location (which could survive a local catastrophe because it is nowhere near it) is problematic for the transactional workloads that OS/400s typify, it is not a simple matter to try to accomplish both high availability and catastrophe recovery with two machines. More things will fade wrong within a data center, which is usually filled with cranky servers, and sometimes cranky people, and carry out so more often than the disasters that will completely consume out a data center. The sales ratio of HA and CBU boxes reflects this, and it makes perfect sense.
Having said that, if a CBU box cost only a fraction of the cost of a entire iSeries or i5 server, and was available on a subscription basis, and dedicated to specific customers in a hosted model, I deem IBM might invent quite a bit more money than it is doing now from the CBU offering. No one wants to own a CBU box. They want to rent it, and they don’t want to pay a lot for it, since the odds are very little that they will ever actually employ it.
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SAP [98 Certification Exam(s) ]
SASInstitute [15 Certification Exam(s) ]
SAT [1 Certification Exam(s) ]
SCO [10 Certification Exam(s) ]
SCP [6 Certification Exam(s) ]
SDI [3 Certification Exam(s) ]
See-Beyond [1 Certification Exam(s) ]
Siemens [1 Certification Exam(s) ]
Snia [7 Certification Exam(s) ]
SOA [15 Certification Exam(s) ]
Social-Work-Board [4 Certification Exam(s) ]
SpringSource [1 Certification Exam(s) ]
SUN [63 Certification Exam(s) ]
SUSE [1 Certification Exam(s) ]
Sybase [17 Certification Exam(s) ]
Symantec [135 Certification Exam(s) ]
Teacher-Certification [4 Certification Exam(s) ]
The-Open-Group [8 Certification Exam(s) ]
TIA [3 Certification Exam(s) ]
Tibco [18 Certification Exam(s) ]
Trainers [3 Certification Exam(s) ]
Trend [1 Certification Exam(s) ]
TruSecure [1 Certification Exam(s) ]
USMLE [1 Certification Exam(s) ]
VCE [6 Certification Exam(s) ]
Veeam [2 Certification Exam(s) ]
Veritas [33 Certification Exam(s) ]
Vmware [58 Certification Exam(s) ]
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