But Wait, There's More

Number of OS/400 Server Customers Stands at 245,000, Says IBM

One of the interesting pieces of information IBM does not divulge very often is the size of the OS/400 server customer installed base. Occasionally, IBM discusses how many servers it has shipped since June 1988, when the AS/400 was launched, and every now and then an IBMer will answer the direct question about how many unique customers there are.

That count has gone up and down in recent years, as much from mergers and acquisitions (where the AS/400 is often replaced with a Unix or Windows box, if one of the companies already has them) as from bad estimates. Back in the summer of 1997, I was told by Bill Zeitler, then general manager of the AS/400 Division, that the worldwide customer count for the AS/400 was about 275,000. When IBM started the "Green Streak" discount promotion and was gearing up to do the second-generation iSeries revamp on the product (which started in January 2003 with the repackaging and repricing of the iSeries and which culminated in the eServer i5 announcements last summer and fall), IBM said that there were anywhere from 211,000 to 246,000 customers, depending on how you wanted to count "uniqueness." Many customers have separate divisions with separate data centers.

According to the latest count from IBM, which was actually buried in the eServer i5 595 announcements in October 2004, the official OS/400 server customer count is over 245,000 customers, using over 400,000 AS/400 or iSeries machines.

IBM to Raise Entry i5 Prices, and Cut Partner Margins?

The rumor on the street is that IBM is pondering a slight price increase of a few hundred dollars on entry Power5-based i5 520 servers. According to sources familiar with what IBM is thinking, the company is pondering a hike of about $400 to $500 on regular i5 520s; prices for the i5 520 Express models, which have geared down processors and run a mix of 5250 and non-5250 processing capacity, will apparently not change. IBM is also reportedly not changing prices for the i5 550, 570, or 595 servers.

At the same time, according to these sources, IBM is also considering dropping the discounts it gives on i5 520 servers by about 4 percent, from the upper 20 percent range to the mid 20 percent range. (The exact percentage a reseller gets depends on many factors.)

According to another rumor, IBM is pondering some changes to the discount structure it gives to resellers that will make them get certain certifications or value-adds to achieve the discounts on i5 hardware they enjoyed in 2004. One reseller says that these moves, which could be put in place in the first quarter of 2005, are designed to make partners jump through more hoops, get less margin, and yield more money for IBM. While this may be a good strategy to bolster IBM's numbers, taking back $1,000 on an entry i5 520 server is bound to make resellers grumpy--and may make it that much harder to sell the i5 against entry Wintel and Lintel boxes.

Heads Roll At Oracle and Former PeopleSoft

Just before the Christmas holidays, and after Oracle had prevailed in its hostile takeover of rival PeopleSoft, the founder of the latter company, Dave Duffield, resigned as chairman and CEO. Duffield, an electrical engineer by training, started PeopleSoft in 1987 and served as its chairman for the entire history of the company and was also its CEO until 1999, when he brought in Craig Conway, a top executive at Oracle, to take the CEO post. Duffield quit on December 21.

On December 28, according to a report in the Wall Street Journal, Oracle fired four of PeopleSoft's executives, including co-presidents Phillip Wilmington and Kevin Parker, general counsel James Shaughnessy, and chief marketing officer Nanci Caldwell. Parker was also doing double duty as PeopleSoft's chief financial officer. In a filing with the Securities and Exchange Commission, Oracle said that Safra Catz and Charles Phillips, who are co-presidents at Oracle, would hold those same posts at PeopleSoft, and that Harry You, Oracle's CFO, and Daniel Cooperman, the company's chief marketing officer, would hold those positions at the newly acquired PeopleSoft as well.

Oracle is planning a formal launch of the merged Oracle-PeopleSoft-J.D. Edwards goliath on January 18, when it will present its vision of the future and give details of how this merger will be accomplished. According to The Journal, Oracle is already asking two of its own executives--Ronald Wohl, who heads development of the Oracle Applications unit, and Michael Rocha, who heads Oracle's support operations--to step down. John Wookey, who reported to Wohl, is expected to be named as the new head of the application software unit and will also be put in charge of integrating PeopleSoft's products into the Oracle products. Wohl is said to be staying on at Oracle, and will be given a new position. Juergen Rottler, who just jumped from Hewlett-Packard a few months ago, will take over as head of Oracle's support business unit. Rocha is said to be leaving Oracle. Oracle is planning on making announcements concerning layoffs for the merged company to employees before the January 18 shindig and will undoubtedly be queried about this at the event.

NaviSite to Resell EnterpriseOne and World ERP Suites

Just before Oracle finally got its hands on enough shares to take over PeopleSoft in December, NaviSite announced that it had signed a deal with PeopleSoft to resell the former J.D. Edwards' EnterpriseOne and World ERP suites.

NaviSite, based in Andover, Massachusetts, is a publicly traded company that was founded in 1997. It has 500 employees and 1,100 customers. The company has been authorized to resell the EnterpriseOne and World suites to customers that have $100 million or less in annual revenues. NaviSite was spun out of dot-com incubator CMGI in 2001 and has one of the biggest AS/400 shops in the world--Cabela's, the outdoor and hunting supply retailer--as its customer. NaviSite deploys applications on behalf of midrange shops and also offers third-party applications under a hosted model; it has data centers in the United States and the United Kingdom for its hosted customers.

IBM Outsources Some Power Server Manufacturing to China

IBM announced in December that it was selling off its entire PC business to Lenovo Group, a Chinese maker of PCs, and the next day it announced that it had gone to rival China Great Wall Computer Shenzhen of Shanghai and given that company a sweetheart deal to make IBM's xSeries and OpenPower servers in China for distribution in the Asia/Pacific region.

The Great Wall deal marks the first time that another IT supplier has been given the rights to manufacture IBM's RISC-based Power servers. While Bull has for a decade licensed and rebranded IBM's entire RS/6000, pSeries, and p5 Unix servers, the company has never been allowed to manufacture them. Great Wall is apparently only being allowed to manufacture the Linux-based OpenPower variants of the Power5 "Squadron" servers. The question now is how long will it be before IBM outsources the manufacturing of OS/400-based i5 servers or AIX-based p5 servers to Great Wall or another company? If IBM wants to squeeze more profits out of the Power server line, it will be sorely tempted to leave the manufacturing to someone else, and this deal is probably a toe in the water for such an eventuality, even if IBM restricts Power server manufacturing by a third party to a Chinese manufacturer for distribution in the Asia/Pacific region.

Incidentally, Great Wall had a partnership with IBM already to make xSeries servers and also had a separate partnership with IBM whereby it made IBM-branded PCs for Asian market. Under a separate transaction, IBM bought Great Wall's stake in the PC operation, which presumably will be now handled by Lenovo.

IBM Helps Partners Push i5/OS with 'How To' Guides

Just as the year was ending, IBM's PartnerWorld organization announced enhancements for its Virtual Innovation Center to help OS/400 partners sell their solutions on the i5 platform. IBM launched the virtual center in 2003, and it provided partners with access to the latest IBM hardware and software technologies on a virtualized, remote basis so that they could test their applications on actual gear.

IBM has now added virtual partitions and grid technology to the center, which allows a collection of IBM servers to support a mix of OS/400, Linux, Windows, and Unix partitions for partners to access as they test their applications. Many software developers have to work on many different IBM platforms, so such virtual resources are a great aid to their development efforts. IBM offers the resources of this grid to partners through a "virtual loaner" program, which was established six months ago and has hosted more than 200 development projects in that time. In addition to setting up the virtualized server grid, IBM has put together 18 new development and marketing guides that help partners plan, port, tune, and test their applications against IBM middleware and on various IBM platforms.

Finally, IBM has also announced a new Web-based server-sizing tool that allows companies to pick the type and size of system they need to support their applications. The system sizer can model xSeries X86-based servers and i5, p5, and OpenPower Power-based servers.

ACOM Establishes Electronic Medical Records Division

ACOM Solutions announced that it has acquired the assets of New Times Med, a specialist in software designed to help chiropractors make diagnoses. New Times Med sells a patient diagnosis and management system, called RAPID, and a graphical medical reporting tool, called Spine Report, to chiropractic offices; both programs currently run on Windows. Both ACOM and New Times Med are privately held, so they did not divulge the details of the transactions.

ACOM, based in Long Beach, California, is a familiar name in the iSeries market and has a presence in other markets as well. The company provides document management, electronic payment, and other middleware that interfaces with ERP systems. With the acquisition of New Times Med, ACOM plans to set up an Electronic Medical Records Division in Tampa, Florida, where New Times Med was based. Cesar Barragan, founder and president of New Times Med, will run that division. Gregory Church, vice president at ACOM, will oversee the division. Church said in a statement announcing the deal that ACOM would retain all employees of New Times Med and gradually add to its offices and staff.