The Four Hundred

Last week at COMMON, Guild Companies editors had a chance to pick the brains of IBM's top iSeries executives, including Al Zollar, new iSeries general manager, Cecelia Marresse, vice president of iSeries marketing, Paulo Carvao, vice president of North American iSeries sales, John Reed, iSeries product line manager, and several others. Conversations ranged from supply problems in late 2002 and the early popularity of the new iSeries Model 870s to keeping loyalties among ISVs and the prospects of running the Oracle database on the iSeries for the first time.

Zollar says IBM has put the lessons it learned from last year's GreenStreak promotion to good use with the new iSeries servers that it launched two months ago. Zollar admitted that IBM was caught off guard just a tad by the demand that GreenStreak generated, and wasn't able to ship all of the boxes that were ordered. "We left some orders on the table that we could not fulfill in 2002, and we wound up fulfilling in January and February some of the demand that was generated through the GreenStreak program," Zollar told Guild Companies. "We decided to make sure we plan for the upside, as opposed to planning for the downside [with the new iSeries line]. I think our experience coming off GreenStreak shows that we really should be planning for the upside."

While orders for the new iSeries are tracking as IBM planners thought they would, there have been some small, but interesting, deviations from forecasts. For instance, IBM is selling a lot of iSeries Model 870s, Zollar says. "The 870 has been very popular," he says. "I want to be clear. We're on those tracks across all of those servers. If you take the high end, there are more 870s than we expected. There are fewer 890s than we expected. But when you put it in aggregate, it's actually more than we expected."

IBM's January 20 announcements are all about generating growth, and doing it quickly. While everybody in the OS/400 industry wants growth, some people have expressed concern that the steep discounts that IBM is delivering with the new boxes, which can range upward to an 80 percent increase in price/performance, may hinder IBM's capability to turn a profit, and could thus affect the long-term viability of the platform. Zollar maintains that the new iSeries servers and the new packaging can be profitable for IBM, and he pointed to a recently launched demand-generation campaign for IBM's business partners, which, he says, will help IBM get there.

"We're putting in over $30 million in 2003 to help ISVs get enabled and get to market, not just in comarketing, coadvertising, but also in paying their value-add," Zollar says. "I'm really convinced that this is going to get a lot of momentum back into the iSeries. Of course, when we get result reports at the end of the quarter, that will be proof. But we're doing this because we expect growth." He also said that IBM would be giving partners who bring in new customers to the iSeries an extra 20 points of margin on their deals. This is a radical move by IBM--certainly something we have never heard of before--and if this doesn't motivate partners, it is hard to imagine what will. One of the sticklers with the GreenStreak promotion, which gave customers a 50 percent discount on Model 270 and Model 820 iSeries servers, was that resellers couldn't make any money on it. IBM has, with the new product line, given its resellers that same profit margin on iSeries gear and software that they enjoyed on non-GreenStreak machines. Prices have been cut, of course, so there is still some grumbling. But that is just the server business, which is relentless in the advancing of price/performance.

The persistent question about running Oracle databases on the iSeries is coming up again, now that IBM is planning to support AIX on the iSeries next year. Zollar, a software guy during his entire career as a Big Blue executive, realizes the value in keeping the lines dividing software capabilities clean, as a way to ensure allegiance. "Some people have observed that one of Oracle's biggest strategic errors was getting into the application business, because it immediately pitted them against all of the application providers who had been successful in driving business in Oracle's database to the platform, and quite honestly, we at IBM took advantage of that," he says. "You step back and look at what Microsoft is doing, they're kind of doing the same thing. They decided that they're going to be in the application business, with the acquisition of Great Plains and Navision. So this is a pretty strong statement to any ISV that's paying attention, that Microsoft is your competitor--if not immediately today, then probably in the future."

While IBM will be supporting Microsoft's .NET framework, through the Integrated xSeries Server coprocessor and the Integrated xSeries Adapter cards for outboard servers, Zollar gave a bit of advice to OS/400 ISVs that would require a key piece of application middleware to run on a Windows server. "I think many of these ISVs will be a little bit concerned about putting their software on a platform that allows a Microsoft person to come in and make a sales call against them," he says. "That's one side. The other side is customers being locked into the Wintel architecture as their only choice, and having the choice, with J2EE [Java 2 Enterprise Edition], of Wintel, iSeries, the Unix platforms--all the platforms that are there. And, by the way, with the iSeries uniquely being able to have all that in the same box, we think that bodes well for our ability to attract new workloads."

The story becomes less clear, however, when the iSeries does become a one-stop shop for customers who wan to run OS/400, Linux, Windows, and AIX, which IBM has given some commitment to running natively on the iSeries in 2004. "Exactly which of the environments they choose for the workloads is hard to predict, but we want to be positioned so that, wherever they go, the iSeries is there," Zollar says. But don't get confused about what this really means. Zollar says the iSeries designers are not trying to take every item in the software universe, put it on a checklist, and make sure it all runs on the iSeries. "That's not what our value proposition is all about. I think, maybe in the recent past, we might have fallen into the trap of trying to follow the curve of the Unix business and the Intel business, because that really is kind of their model. In our model, the 'i' stands for integration." This integration does not mean that IBM is suddenly going to push the iSeries alone and drop the pSeries--or vice versa. These lines will be based on similar, if not identical, technology, but they will be packaged and priced differently.

John Reed, IBM's iSeries product line manager, the guy who is responsible for the launch of the current iSeries line and the future Power5-based "Squadron" servers, says that there is a possibility that the Oracle database could be one of the new workloads coming to the iSeries. "There's some interest in that. I'm not going to announce anything today, but I can see that as a logical conclusion for Linux," he says. "Once you put that on Power-Linux, it will be available to both iSeries and pSeries. I think it will happen. There's nothing to stop it from happening. It just takes time." Of course, IBM is also planning to deliver DB2 on Linux for PowerPC as well, and that will probably be in customers' hands long before Oracle compiles for Linux on Power processors.

How IBM will handle the issue of multiple and incompatible databases running on the iSeries will be interesting to watch. The OS/400 flavor of DB2--DB2/400--has shipped as an integrated component of the operating system for years. With IBM's "statement of direction" to run AIX in iSeries logical partitions, with the Power5 generation boxes, in 2004--and the freedom that executives like Reed are increasingly showing in talking about it--one might conclude that AIX could provide a home for an Oracle database just as easily as Linux. But much of that has yet to be worked out, Reed says.

IBM is developing new virtualization technology based on a new hypervisor layer that rides between the hardware and the operating system; this hypervisor is an abstraction layer, much like the technology-independent machine interface in OS/400 that has allowed OS/400 to be ported across radically different hardware over the years. This hypervisor will be used on both iSeries and pSeries machines, and is being developed by the same team in Rochester, Minnesota, and Austin, Texas. This hypervisor will require some hardware changes, says Reed. "It will be something that makes the OS discussion immaterial," he says. "We called it an on-demand management environment, but that doesn't exactly roll off the tip of your tongue. I don't know what we will ultimately call it." (A smart aleck would call it VM.) We heard, about a year ago, that this hypervisor will be able to manage up to 256 operating system images on a single machine, which is four images per processor on a 64-way Power5 Squadron server. However, IBM already supports 10 Linux partitions per processor, so it could turn out that IBM's clever engineers have figured out how to support 640 partitions per machine. This would be way cool, and would easily put the economics of a massively partitioned iSeries in the same league as underused servers running Windows, Linux, and Unix on a per-operating-system-instance basis.

Meanwhile, at IBM's xSeries headquarters in Raleigh, North Carolina, IBM is continuing to add more advanced systems management capabilities to its Windows-based servers, and that has an effect on the OS/400 installed base, of which, Reed says, 90 percent use Windows servers. "Many of the technologies in iSeries and zSeries are 'water falling down' into the xSeries, things like having a service processor to manage the health of your system," he says.

Today, with Power4-based iSeries servers running OS/400 V5R1, companies can use their iSeries boxes to consolidate up to 55 Intel servers via a variety of internal IXS and external IXA Wintel servers, Reed says. That number will go up in the future. "We are looking at what we do next to attach more and more Intel servers and still manage them," he says.

In addition to a strategy of surrounding Wintel workloads with iSeries management capabilities--which does nothing to prevent a sales person at a Windows-based ISV from making pitches to IXS and IXA users--IBM, thankfully, has another tactic: going head-to-head with the Windows-centric portion of the small and midsized business (SMB) market with its new line of Express middleware products for the iSeries, including WebSphere Express and DB2 Express. The most promising of these Express products--and the only one currently available on OS/400, as luck would have it--is the new WebSphere Application Server Express for iSeries 5.0, which became available on February 20.

Kelly Schmotzer, WebSphere marketing manager for iSeries, says IBM committed itself to a scaled-down version of WebSphere Application Server after the executives recognized that the full version was too complex and too expensive for the average iSeries shop. "About 7 percent of the customers could actually buy, use, and appreciate WebSphere with the hardware that they had," Schmotzer says. The full WebSphere Application Server required about 500 CPWs, but the new WAS Express product will be quite a bit less, and consume less memory and be easier to configure as well.

IBM put a lot of work into this version of WebSphere Application Server Express to make sure it would be something that customers could use, especially after the market failure with the full WebSphere product. "We did not have the right [WebSphere Application Server Express] product initially, so we worked with some accounts very closely to craft this product so it was much more appropriate for the midmarket," says Dave Chew, director of enterprise transaction systems for IBM. "WebSphere Express changed drastically from the beginning stage to the deliverable stage."

IBM has established an Early Enablement Program to help drive acceptance of WAS Express. According to Schmotzer, acceptance of the program was much higher than anticipated, with about 600 ISVs--225 of which are iSeries specific--joining the program. "I think the timing was good for the iSeries software vendors," Chew says. "They are looking for more solutions that will help them in this venture into e-business. We are very happy with the initial success."

"But only time will tell how successful it will be," Chew says. "We have a lot of work ahead of us. We certainly did not get everything done that we needed to get done. There is more of the WebSphere platform that needs to be delivered on Express."