the year in review: 1998: A New Beginning for AS/400

The AS/400 reached a crossroads in 1998. It celebrated its 10th birthday in June, 10 years of being the most successful multi-user business computing system, while looking ahead to playing an ever-increasing role in the enterprise computing market thanks to February’s groundbreaking V4R2 release of OS/400.

V4R2 and everything that came with it was the biggest story of 1998. Hailed as the most significant OS/400 upgrade since CISC to RISC, the February release brought Java, native Lotus Domino and Windows NT on the IPCS to the AS/400.

The AS/400’s implementation of the Java Virtual Machine soon became recognized as the best in the computer industry since the JVM runs within the operating system, rather than on top of it as on other platforms. As Java goes, so will the AS/400 in the years ahead.

Lotus Domino quickly found its place in the AS/400 world as well. By the end of the third quarter, Domino sales on the AS/400 had already surpassed total Domino sales on Unix and the AS/400 was accounting for 10 percent of all Domino servers sold.

The AS/400’s IPCS (Integrated PC Server) now supported Windows NT, meaning that customers seeking to integrate the hot-selling NT into their AS/400 environments could do so without having to buy standalone NT servers. They could now run NT from within their AS/400s. With next spring's V4R4 announcement, IBM will upgrade the current 200 MHz IPCS to a 333 MHz Pentium II capable of supporting up to 1 GB of memory.

The introduction of IBM’s Net.Commerce Web-based commerce solution also was introduced to the AS/400 with V4R2, making e-business a reality for the platform. And concurrent with V4R2 was the emergence of the AS/400e Model 170. Starting at $9,995, the small-business servers offered the widest range of growth ever within a single model, as five processor performance points provided more than four-fold growth, and could support anywhere from two to 200 users.

Helped along with various marketing and special financing promotions, the Model 170 became one of the top-selling AS/400s of 1998.

Just seven months after V4R2’s debut, IBM further strengthened the AS/400 with the September release of OS/400 V4R3. V4R3 was more evolutionary than revolutionary, but still contained important functional enhancements such as for storage and disk compression, database indexing, improved Windows client integration and improvements in building Windows applications for the AS/400.

Network integration enhancements were made to the AS/400 including built-in OS/400 TCP security and management and Dial-On-Demand (DOD) networking. E-business enhancements to V4R3 included the addition of a SET-compliant payment server, a text search engine for the AS/400 HTTP server and Lightweight Directory Access Protocol (LDAP) services.

V4R3 also ushered in a new generation of processors for the AS/400. Code named Northstar, the processor series brought CPW gains of up to 94 percent to 8-way and 12-way Model 650 and S40 machines, plus smaller, but significant CPW gains to the Model 170.

The new OS releases weren’t the only news in the AS/400 world in 1998. An International Data Corp. study made headlines in January, reporting what many AS/400 users have known for years: that AS/400 servers beat all competing midrange Unix and PC LAN systems in customer satisfaction and time to market for deploying new applications, and demanded the fewest man-months of developers’ time.

Not all the early-year news was good though. The AS/400 found itself at the center of a stolen computer parts ring. A current and former IBM employee allegedly stole $35 million worth of AS/400 parts from IBM for resale to brokers. After the two were caught, they helped the FBI set up a sting operation that snared at least 16 computer brokers in five states.

Acquisitions were in the news early in the year. Borland (Scotts Valley, Calif.) acquired Visigenic Software (San Mateo, Calif.), giving it a foothold in the CORBA world and NLynx Systems (Austin, Texas) emerged from the ashes of Andrew Corp.’s defunct Network Products Division. Borland made headlines again in the spring, when it changed its name to Inprise, reflecting its focus on enterprise application development tools.

IBM reported a 3 percent revenue increase for the fourth quarter of 1997 as the AS/400 “returned to growth.” Meanwhile Compaq Computer announced its acquisition of Digital Equipment Corp., cementing the market shift from minicomputer to PC technology. The deal would close in June.

Another IDC study indicated that midrange server revenues held steady from 1996 to 1997, despite the perceived inroads made by Windows NT-based PC servers. The study concluded that NT was still limited to file, print and e-mail, rather than the transaction intensive work that AS/400 and Unix specialize in. Another survey, by Olsten Corp. (Melville, N.Y.), indicated that groupware and intranets were catching on, particularly in the midrange space. And IBM expanded its ERP custom server program in February, adding International Business Systems, Intentia and JBA to J.D. Edwards, SAP and SSA. MAPICS, Baan and Infinium would join the program later in the year.

In an effort to boost acceptance of the landmark V4R2 release, IBM announced Project E-Jump, enabling customers still stuck on the non-Year 2000 compliant V2R3 to migrate directly to V4R2 without having to stop at V3R2 first. E-Jump was expanded in October after the V4R3 release, allowing V3R0.5 and V3R1 customers to make the direct jump to V4R3. IBM also announced a software update support plan in March to help customers avoid budget problems when upgrading.

Meanwhile, Nate Viall & Associates’ (Des Moines, Iowa) 1998 AS/400 Salary Survey showed that AS/400 programmers’ average salaries were up 5 percent to $44,200. Management salaries were up just 0.7 percent from January 1997 at $68,300.

IBM announced in March that it had successfully consolidated 40 PC servers into three AS/400 S40s for its Rochester, Minn. facility Domino implementation. IBM also announced the Tarpon DASD super array for multi-system storage, while Advanced Business Link Corp. (Kirkland, Wash.) came up with a native AS/400 Java client applet that includes 128-bit SSL security. Codenamed “Javalin,” the product is now marketed as Strategi.

A MIDRANGE Systems special report in May concluded that despite the availability of price-competitive small business AS/400 servers like the Model 150 and Model 170, acceptance of the AS/400 was still being held back by the higher cost of AS/400 applications. IBM made the Model 150 and 170 even more competitive by offering 2.9 percent financing to first-time AS/400 customers of the machines.

Price competition and purchasing incentives continued to dominate headlines in the spring. IBM offered AS/400 customers who replaced a non-IBM PC server with an IPCS, AS/400 LAN adapter and Windows NT server software a $950 rebate. Meanwhile, IBM’s entry level Series 100 Network Station dropped to $499. The NC market never really took off, thanks to heated price competition in the PC market, where prices dipped below $600 by the fall. But NCs remained in the news.

In the first quarter, Lotus released a package of business productivity and application development tools for the high-end IBM Network Station Series 1000 called eSuite. It was the first significant Network Station-specific software release. IBM would later announce that it would build Network Stations with Intel processors, rather than its own PowerPC chip, starting next year, largely to make them more compatible with other companies’ hardware products.

Another NC pioneer, Affinity Systems (Lansdale, Pa.), switched its thin-client efforts to the Enterprise Windows-Based Terminal (eWBT). The eWBT uses a Windows CE operating system installed in its flash-memory unit and interfaces with a Windows NT server, or directly to an AS/400 for green-screen terminal emulation.

By April the early returns for V4R2 looked promising. AS/400 sales increased in the first quarter of 1998, going against an overall trend that saw IBM’s hardware revenues fall by 8 percent. Total IBM revenue was up more than 2 percent from the year-ago period.

IBM Global Services opened a dedicated AS/400 Recovery Center in Rochester, Minn., becoming the world’s largest AS/400 disaster recovery center, with 12 AS/400s and plans to add eight more.

In its continuing efforts to turn AS/400 users on to e-business, IBM unveiled a packaged e-business networking solution that included an AS/400e Model 170, Lotus Domino software and an IBM 2210 Nways Multi-protocol Router. The package was designed to enable AS/400 customers in small to medium businesses to easily install the networking infrastructure needed to conduct e-business.

A major player in the AS/400 application development space went by the boards when Synon Corp. (Larkspur, Calif.) was bought by Dallas-based Sterling Software. The $79 million deal closed in August with Synon’s 2E becoming COOL:2E and Synon Obsydian becoming COOL:Plex. Sterling added the AS/400 to its enterprise application development tools stable with the acquisition, but its long-term commitment to the AS/400-centric 2E remains unclear.

In another boon to AS/400 e-business, I/Net Inc. (Kalamazoo, Mich.) ported Netscape Communications Corp.’s enterprise Web server to the AS/400. The server debuted in August and was augmented with the V4R3 release of OS/400 in September.

As the summer wore on, the success of February’s V4R2 release became apparent. Despite a 13-percent decline in second-quarter hardware revenue, AS/400 shipments were up 25 percent during the three-month period from April to June. IBM’s total revenues jumped 5 percent from the year-ago period.

IBM debuted a catchy new advertising/marketing campaign in advance of the early September release of V4R3. And the copper chip made its debut in September, shipping for use in Apple Macintosh computers. AS/400 Division executives said the AS/400 would go copper anywhere from the second half of 1999 to the first half of the 2000. The CMOS7 copper chips will be the basis for the Pulsar series of AS/400 microprocessors, promising faster processing speeds and improved energy efficiency.

Long-time AS/400 ISV Silvon Software (Westmont, Ill.) sold its Software Development Management (SDM) business unit to Waterloo, Ontario-based Mortice Kern Systems Inc. The move gave MKS an AS/400 software configuration management business to go along with its support for Windows NT, Unix, OS/2 and OS/390. Silvon focused exclusively on its business intelligence products. Dynasty Technologies (Redwood Shores, Calif.) extended its application development business to the AS/400, not by an acquisition but by porting its Dynasty Development Environment to the AS/400 for the generation of large-scale AS/400 e-business applications.

The fall saw IBM establish a Systems Management Partner Group to provide technical assistance and marketing support for AS/400 systems management software vendors. ACI Worldwide (Omaha, Neb.), Bytware Inc. (Grass Valley, Calif.), Candle Corp. (Santa Monica, Calif.), MBA Inc. (Tulsa, Okla.), New Dimension Software (Irvine, Calif.) and PentaSafe Inc. (Houston) were the charter members of the SMPG, designed to make OS/400 system and network resource management easier for OS/400 users.

With Enterprise JavaBeans looming as the next frontier of Java-based application development, IBM selected WebLogic’s (San Francisco) Tengah as the preferred Java application server and EJB technology for the AS/400. The move must have made WebLogic a hot commodity since San Jose, Calif. middleware provider BEA Systems, bought out the company within weeks of the announcement.

IBM’s third-quarter financials were strong as Big Blue reported $20.1 billion in earnings, an 8 percent increase over the year-ago period. The AS/400 contributed to that success with strong sales in both hardware and operating system software, perhaps sparked by the V4R3 release late in the quarter.

IBM announced logical partitioning support for the AS/400 for the planned February 1999 release of V4R4 of OS/400. Logical partitioning, a System/390 technology, will allow one AS/400 to be divided into multiple OS/400 environments, making server consolidation easier than ever on an AS/400.

In October, the AS/400 welcomed Baan to its stable of ERP software providers. The move meant that virtually all of the top ERP software providers now ran natively on the AS/400, with the exception of Oracle, which requires an Oracle database.

Consolidation continued in the AS/400 ISV world when Perle Systems (Toronto) acquired the Affinity Systems 5250 emulation card line from Development Concepts Inc. (Lansdale, Pa.). Perle will continue to market and sell the line under the Affinity name.

The man credited with re-inventing the AS/400 left IBM’s hardware division altogether. Bill Zeitler, who had most recently been general manager of IBM Server Brand Management, was appointed general manager of Worldwide Software Sales and Marketing at IBM.