But Wait, There's More

IBM Slashes iSeries Disk Drive Prices

As part of its relatively minor eServer i5 announcements last week, IBM said it has cut price tags on two of its disk drives. IBM chopped the price of the feature 1894 disks used in the i5 line from $1,400 to $750, down 46 percent. This is a 73.4 GB, 10K RPM disk drive. IBM also cut the prices on its 146.8 GB, 10K RPM disks from $1,999 to $1,400, down 30 percent.

WebSphere V6.0 Ships on the iSeries

As expected, IBM will this week begin shipments of its WebSphere Application Server V6.0 application server on the OS/400 and i5/OS platform. WebSphere V6.0 supports the Java 2 Enterprise Edition 1.4 spec and is the lynchpin in Big Blue's renewed attempt to get iSeries shops interested in its middleware as they try to extend their RPG applications and DB2/400 databases to the Web. IBM is offering WebSphere V6.0 in an Express version, as well as in a full-blown version that offers functionality equivalent to WebSphere on other platforms. Since there has not been a major architectural change with WebSphere V6.0, nor an effort to make it seamlessly integrate with OS/400, we presume it is no easier to use than WebSphere Version 5.0.

IBM Rolls Out Compact, Two-Core p5 Unix/Linux Server

With the Power5-based "Squadron" servers that IBM began rolling out last year, the company has taken a three-pronged attack on the server market. One type of Squadron box is designed to support its OS/400 operating system with auxiliary AIX and Linux partitions (the eServer i5), another is designed to only run Linux (the OpenPower), and the last supports AIX and Linux--and sometimes OS/400 (the eServer p5). Last week, the p5 line got a denser two-way machine, the p5 510.

The p5 510 is a rack-mounted machine that fits in a 2U form factor and comes with either a dual-core Power5 chip. (For more details, see "IBM Rolls Out Compact, Two-Core p5 Unix/Linux Server," in The Unix Guardian, our Unix newsletter.)

IBM has already said it will not offer anything below the 4U form factor in the OS/400-based i5 line, because of the expandability those customers require, so the i5 520 is the smallest and cheapest machine they can buy. Incidentally, the i5 520 costs a lot more than an i5 510 would, if IBM had the decency to offer such a low-cost box to its loyal OS/400 customer base. This is what IBM needs to do to compete against Windows and Linux, the two darlings of the server community these days. Having OS/400 compete with Unix, which is what the i5 520 and 550 machines are about, is not sufficient. IBM has to make the OS/400 platform compete in terms of perceived value and lower price tag for hardware and software with Windows and Linux, too.

iSeries ISVs Report Improving Financials

Manhattan Associates registered a 12 percent increase in software license and hosting fees and an 8 percent increase in service fees for its fourth quarter ending December 31, helping to close out a successful year for the Atlanta software company. Total revenue for the fourth quarter increased by 13 percent, to $55.8 million, but net income dipped by $1.3 million, to $5.2 million. For the year, Manhattan Associates registered a 9 percent increase in total revenue to $214.9 million, while software and hosting fees increased a healthy 15 percent, to $49.9 million. Net income was $22.1 million, essentially flat year-over-year, but that didn't dampen the spirits of Pete Sinisgalli, the company's president and CEO. "We believe 2004 was a successful year for Manhattan Associates," he said, noting that the company's sales of warehouse management software increased 11 percent, three times faster than the overall market, while supply chain software sales increased 19 percent.

Intentia also announced positive results for its fourth quarter and fiscal year ending December 31. The Swedish ERP software developer had total revenues of SEK 895.0 million (or U.S. $126.7 million at current exchange rates) for its fourth quarter, a 3 percent increase from the same quarter a year ago. Profit for the fourth quarter was SEK 90.9 million (about $12.9 million) compared with a loss of SEK 158.5 million in the same quarter a year ago. Software license revenue for the quarter increased by 12 percent from a year ago to SEK 118.7 million. The good fourth quarter didn't totally offset the decrease in revenue during the rest of the year, however, as Intentia's revenues for fiscal 2004 declined about 4 percent to SEK 2,982.9 million (or $422.3 million), as software license revenue for the entire year only increased 1 percent from 2003 to SEK 440.8 million. The company did manage a 14 percent improvement in its net, however, as it decreased its loss for the year to SEK 354.2 million (about $50 million) from a loss of SEK 411.1 million in 2003.

iSeries distributor Agilysys reported a 12 percent increase in sales for its third quarter last week. The Cleveland, Ohio, company brought in a total of $516 million for the three months ending December 31, and increased its net income a very healthy 64 percent, to $14.2 million. "Agilysys continued its strong performance in our highest-volume quarter, with solid execution across the entire business," said Arthur Rhein, Agilysys's chairman, president, and CEO. In addition to buying iSeries (and other servers) from IBM (and other computer makers), Agilysys is in the OS/400 applications business, having bought IAD, a hotel booking software developer, about a year ago.

DataMirror to Buy Back Shares in a Dutch Auction

Having decided that its per-share price was too low, DataMirror last week announced it will buy back up to 2 million of its 10.5 million outstanding common shares. DataMirror is buying back its shares by way of a Dutch auction tender, which gives shareholders the opportunity to specify the price. DataMirror says it will buy back up to 2 million of its shares, provided the selling price lands between $8.50 Canadian and $10 per share. In a Dutch auction tender, all winning buyers end up paying the same price per share, which is the lowest successful bid.

Shareholders responded immediately, and DataMirror's stock, which is co-listed on the Toronto Stock Exchange and the Nasdaq National Market, shot from about $8.60 Canadian to $9.80 within a day. "This offer represents an effective use of the company's resources and is in the best interests of all its shareholders," said Nigel Stokes, DataMirror's CEO and the largest shareholder. "The buy-back will be funded from the company's existing cash balance and, upon completion of the transaction, will leave the company with adequate resources to aggressively pursue its business strategy." According to a Securities and Exchange Commission filing on February 2, Stokes controls about 2 million shares of DataMirror.

IT Services Growth Slows in 2004, Says Gartner

The weakening U.S. dollar and the prevalence of U.S.-based services giants in the worldwide market have made it look like the IT services market is growing, according recent research from Gartner. The company says that the IT services market, which includes outsourcing, offshoring, systems integration, and other kinds of consulting, grew by 6.7 percent, to $607.8 billion. That's pretty decent growth, right? Well, yes and no. When you take out the effects of the dollar plummeting, the real growth in local currencies is more like 2.2 percent, says Gartner.

As you might expect, IBM was the market leader in the services racket, with $46.4 billion in sales and 8.9 percent growth compared with 2003. Electronic Data Systems was the number-two services company in the world, with $20.6 billion in sales, followed by Fujitsu with $16.9 billion, Hewlett-Packard with $14.2 billion, Accenture with $14.1 billion, and Computer Sciences with $14 billion. The market shares of these players are, despite changes of billions of dollars in sales (except for EDS, which was flat), are virtually identical as they were last year because there is so much money these companies do not get in the services business. Gartner is not expecting much change in 2005, either.