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July 2003

The New Compaq and The Old IBM

By Scott Hirsh

“Too bad that all the people who know how to run the country are busy driving taxicabs and cutting hair.”

— George Burns

In my role as “trusted advisor” I was required recently to attend IBM pSeries training. As someone who has managed to avoid IBM for an entire career, being inside Big Blue was a revelation. But what really got my attention was the session on competition. There on one of the slides was the following:

“Customers experiencing dissatisfaction with current server provider represents an IBM winback opportunity. Dissatisfaction driven by:

“… Planned discontinuation of competitors’ products, such as Compaq Alpha and HP e3000

“ Note: 57 percent of HP e3000 customers surveyed expressed dissatisfaction with HP’s migration products and services. Sample quote: ‘I have so far not seen anything which would make it easier to move to another HP platform than IBM…’”

Frankly, I was expecting more competitive positioning relative to the HP 9000, and was surprised to see any mention of the HP 3000 in an AIX context. But that’s because I both underestimated IBM’s vision as an IT business partner and failed to update my perception of IBM relative to current initiatives. This is not your father’s IBM.

For those of us who remained loyal to HP over the years despite compelling threats – remember “Digital Has it Now”? – seeing IBM as more paternalistic, savvy and customer focused is a major adjustment. But for those of us in the channel, this is not your father’s HP either. In fact, most of my peers refer to the “New HP” as the “New Compaq,” with lots of references to red vs. blue, with the occasional “purple.” However, whichever color you prefer, the closest you will come now to HP blue is IBM’s big blue.

How can I spout such heresy? Let me count the ways:

• IBM considers its entire lineup of servers as one family – eServer. Within this family is zSeries (“near-Zero downtime” or mainframe); pSeries (“Performance” running under AIX); iSeries (“Integrated” under OS/400); and xSeries (X-Architecture, Intel-based, typically Linux).

• IBM seems to value customer retention much more than its competitors, with end-of-life being a last resort. Yes, IBM has had its share of “locked-in” customers over the years who are unhappy with past pricing issues and other strong-arm tactics. But that was then and this is now. Now it is HP who is end-of-lifeing the e3000 and IBM continues to enhance and support the iSeries, whose lineage traces back to the System III that was once a lucrative conversion to the HP 3000. Yes, we’ve come full circle.

• Where once IBM literally defined proprietary, they have truly opened up their platforms, embracing Linux, Java and other enabling technologies and standards. But in so doing, they have not abandoned their legacy platforms like the zSeries and iSeries. Instead, they followed through on what HP once promised but didn’t deliver: they extended their platforms to open standards and backed up this support with real initiatives. Multiple virtual Linux machines on zSeries is a real success story, albeit one without mass appeal. IBM continues to develop their own microprocessors and adopts them throughout the product line, including the iSeries. In my pSeries training the instructor asked which platform has the lowest Total Cost of Ownership? Trick question! You would expect in a pSeries class the answer would be pSeries, but it was not. The correct answer was iSeries. Anyone reading this column should have gotten the answer correct. It’s the same argument we’ve been making for the 3000 vs. the HP 9000. But what’s impressive, is that even a pSeries specialist would argue for the iSeries in cost of ownership. No religious wars there (at least not that day).

• And last, but not least, IBM really, truly, wants your business. I didn’t personally attend any of the iSeries conversion sessions at HP World last year, but I spoke with those who did. They tell me that IBM has a plan for converting 3000 customers to iSeries (although pSeries would work) and makes an impression as “The Old HP.” Frankly, I think they have a good story.

The problem, and what makes HP different

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