IBM Server Move Re-Marketing, Not Re-Inventing

The dust has finally cleared, with IBM revealing its plans to transition the AS/400 into the iSeries 400 as part of the new eserver family, which will also be composed of the pSeries (RS/600), zSeries (S/390), and the xSeries (Netfinity).

In pre-briefings with MIDRANGE Systems, Ian Jarman, IBM’s manager of AS/400 product marketing, painted a bright picture of the move, from both an AS/400 and overall IBM perspective. “By bringing together the leading technologies of these servers under one brand name, we’re going to be able to compete in the market with all the force of IBM,” he says.

From an AS/400 point of view, Jarman says the move will enable IBM to erase the image of the AS/400 as old-school technology. “We’re re-positioning the AS/400 as a significant part of IBM’s server strategy and taking the AS/400 community forward,” he says.

Despite Jarman’s positive spin on things, Tom Bittman, GartnerGroup VP and research director, does not necessarily share Jarman’s enthusiasm when viewing the move from an AS/400 perspective.

“This program is not about finding new growth opportunities for the AS/400, it’s about finding new growth opportunities for IBM,” he says. “The mindset at IBM is beginning to switch to managing the overall server portfolio. The AS/400 fits in that strategy less than the other servers.”

So, what servers will ultimately benefit the most from the eserver move? “It will be helpful to the RS/6000 the most, followed by Netfinity, and then the S/390,” Bittman says. “The AS/400 will benefit the least.”

Although Jarman says IBM will aggressively go after new iSeries customers, Bittman does not see it that way. “ When IBM looks at the AS/400, the biggest question is what they have to do to keep the installed base,” he says. “I think there will be a reduced focus on the AS/400 targeting new customers. When IBM is going after new growth, you’re going to be hearing more about UNIX and NT.”

Looking ahead, Bittman sees a lot of change on the horizon. One of those changes is an increased focus on mid-sized and large companies, and less of a focus on smaller companies. “Within three years, I don’t think there will be any entry level AS/400 servers that compare to the ones on the market today,” he says. “I don’t believe the AS/400 will be targeted at shops with 50 people or less anymore.”

In the past, IBM has been criticized for the lack of marketing surrounding the AS/400. Don’t expect that to change, says Bittman. “I don’t think the funding will be there for the AS/400,” he says. “They’re going to spend a lot of money on eserver marketing, so there will be a little less money for AS/400 specific marketing.”

While Jarman admits that a lot of money will be spent on eserver marketing, he says that the iSeries will also get its fair share of individual marketing, however. “We’re going to focus on the model 270 a lot in advertising because it’s good for b-to-b applications, which is an area we’re going to focus on a lot,” he says.

Part of the eserver strategy is the integration of technologies across the entire product line. Because of this, Bittman expects there will be less of a focus on investments in the individual platforms.

“My view is that the R & D spending on unique AS/400 capabilities will go down starting in a couple of years,” he says. “Five years from now, the activity and funding for the AS/400 in Rochester will be quite different than it is today.”

Although Bittman does not necessarily view the move as a positive one from an AS/400 perspective, he still sees opportunities. One target is large companies with a variety of servers. “They may find they have more opportunity at the high-end than they think. The AS/400 is a good consolidation server,” Bittman says.

He also feels the cross-server integration emphasis could pay dividends for the AS/400 because of its reliability and scalability. The key for the AS/400 is that IBM must highlight the strengths of the server. “They have to market what is unique about each server,” Bittman says. “From an iSeries perspective, they have to explain why prospective customers should invest in it. The AS/400 still has a value proposition because it takes fewer skills to manage it than other servers and that’s what makes it unique.”

Looking at the move from an overall perspective, Bittman says there are three key ingredients to making it a successful one.

The first is the marketing investment must be heavy and sustained. “It’s not going to work if it’s only going to be a three-month program,” he says. “We should see an unusual amount of marketing from IBM for at least a year or so.”

The second is that there must be an immediate change in behavior, from the sales force to business partners to new technologies. “They have to let everyone know they’re changing and moving forward,” Bittman says.

A lack of new initiatives is one area that concerns Bittman. “They need to introduce new programs and technologies,” he says. “This is a risk for IBM because not much is new in these announcements. The only thing that is really new is capacity-on-demand. Basically, it’s re-marketing, not re-inventing.”

The final ingredient is providing a roadmap for what lies ahead. “They have to project a vision so that when people see these announcements, they’re going to have an idea of where IBM is headed in five years,” says Bittman, pointing to IBM’s Magic Box campaign as an example of a program IBM should avoid.

“It was a failure, it was marketing and that’s all,” he says. “Plus, it was confused marketing, because they didn’t distinguish the platforms. They also didn’t do anything in terms of new programs or technologies.

In light of IBM’s announcements, its main competitors (Sun, Compaq, HP, etc.) will not stand still. However, if IBM does everything right, Bittman says “it could come out a big winner. And if that happens, I think the AS/400 could also come out a winner.”

Because Unix is such a popular business platform, Bittman expects a large emphasis will be placed on the RS/6000. “It’s such a big market to play in,” he says. “With the right amount of investing, the RS/6000 could grown revenue, catch HP and even catch Sun (the market leader) in a couple of years.”