IBM made the iSeries its billion dollar baby
IBMs alternative for the HP 3000 customers
forced to leave the platform, the iSeries, got more support from IBM
through investments, promotion and promises in late February. The
iSeries line saw its growth rate retreat into negative numbers in
2004. IBM said it is increasing its co-marketing and co-development
budget for the server which is most like the HP 3000s
integrated design, boosting iSeries spending by hundreds of millions
of dollars in the iSeries Initiative for Innovation. IBM
said the initiative has a $1 billion budget, a third of what HP
promised over the next three years to improve the standing of its
Itanium server business.
Just like HPs support of Itanium, IBM
means to grow the iSeries customer base. IBM started with an ad
campaign in major business publications, kicking off with a four-page
spread in The Wall Street Journal called Why i? IBM is
also going to pay 70 percent of the cost of partner ads when partners
tout their iSeries solutions. IBM announced the initiative at its
annual PartnerWorld conference in front of 3,500 partners. More than
half of those are iSeries software partners who each qualify for
$50,000 in new services.
With that investment IBM plans to revitalize
its core vendors, so these companies can make iSeries the most
profitable product in their lineups. These ISVs have deep reach into
IBMs customer base; by some accounting, the iSeries works at
half of Big Blues 500,000 customer sites. Unlike the razor-thin
margins of the commodity computer business, the iSeries boasts big
profits for IBM. iSeries editor and analyst Timothy Prickett Morgan
estimates that IBM earned $900 million in 2003 iSeries profits on
$1.8 billion in sales and 2004s profits dropped to about
half of that. Some of that slide was due to heavy investment to
launch the new i5 servers, but some resulted from fewer iSeries
sales. Morgan said that every additional dollar that IBM gets
in iSeries sales in 2005 will fall almost straight to the bottom
line. MBAs will actually kill and maim for a business like
To boost the business, IBM wants to include
small customers in the platform road map process for the iSeries,
rather than just the big companies who visited the IBM factory. A
similar shift took place in the IBM zSeries mainframe business in
2003. The proprietary technology in those mainframes is now growing
IBMs bottom line once again.
Many HP 3000 customers arrived on the HP
platform after a retreat from that Big Blue big iron of the 1980s.
Some now see IBMs iSeries as a way to retain a big
vendors support for a cost-effective integrated solution.
Ironically, one of the platforms that
is currently being regarded as a suitable successor here is
IBMs iSeries, said John Boyd, IT Manager at paper
merchant gm2 Logistics Ltd., where a pair of Series 9x9 HP 3000s
still serve. Now they do support their hardware.
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