Lunch, Sort Of, with Mark Shearer (Continued)

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I asked Shearer how the iSeries channel was doing and, in particular, how it was responding to the opportunity qualification process that IBM instituted earlier this year. (See "IBM Gives the iSeries Channel Incentives to Grow and Behave", from the April 11, 2005, issue of The Four Hundred for more on that.) Shearer said based on feedback he has received from the Americas channel, the opportunity qualification process has not been an issue even though it was a pretty big change--in essence, a partner has to demonstrate that they are the dominant partner in the account to actually qualify to make a sale--partners have not been upset because partners have seen profitability improve even if they are not chasing each other's deals so much.

I also asked Shearer if the iSeries marketeers and engineers were considering creating something akin to the Java engines in the zSeries line, which are called zSeries Application Assist Processors. With the zAAPs, IBM offers a low-cost engine--at least low cost compared to the price of a mainframe engine running z/OS--that is suitable to run Java and other so-called "new application" workloads. (As has been the case in the iSeries, the zSeries customers running legacy workloads are punished with higher prices for hardware to run those legacy applications. Ironically, the legacy protocols used for OLTP workloads are very efficient.) Shearer was on the team that created the zAAPs, and he said that Rochester would be willing to talk about the possibility for the iSeries. So stay tuned on that. (In the meantime, you can read "So When Does the iSeries Get Java Engines?" from the April 12, 2004 issue of this newsletter.)

Shearer then turned the tables on me and asked what I had been hearing about the iSeries market. I told him that the complaints about iSeries marketing had subsided and that many of the dealers I talk to have seen an uptick in business this quarter, which I found very encouraging. I explained I wanted to send my kids to college some day, and when partners make money, the odds increase that they will spend some of that money on advertising in our publications.

I complained for what must have seemed like an eternity about the lack of a feeder system for the iSeries line, and Shearer actually took notes on what I said. I explained that the real genius of the PC server makers is that they get the very small businesses--the "S" in the SMB market--buying their PCs when they start their businesses, and then, when they graduate to the point where they need a server for infrastructure workloads or to run their first accounting program that is not a spreadsheet, if they have had a positive experience with their PC supplier, they will preferentially and lazily choose their PC maker for their first server acquisition.

I explained that a decade and a half ago, there were not PC servers, and if a company grew to be a certain size--maybe it was $10 million, maybe it was $25 million--they had to start automating their operations and they picked a box like the AS/400. Today, a server costs $900, and a stack of systems and applications software suitable for running a $10 million or smaller business can be acquired on an X64 server for less than it costs to buy a bare-bones iSeries server.

To my way of thinking, I explained, IBM has two problems with the iSeries. First, small businesses that are familiar with Windows on their desktops will choose Windows for their servers, even if that is stupid. Familiarity might breed contempt, but contempt is a lot less scary--and often initially less expensive-- than the great unknown. So IBM has to get an iSeries-based turnkey solution--perhaps with a fixed number of users and coming in at very low price points--$1,000, $2,500, and $5,000 for a complete solution--out there into the market as an alternative to inexpensive Windows servers. Second, the iSeries needs to get the same entry Windows solutions that businesses pick--Peachtree Accounting, Sage, and even Microsoft's own Great Plains--onto the iSeries. The iSeries has to go toe-to-toe with Windows without resorting to the whole "ease of use, ease of administration" marketing campaign. Small businesses can't take a long view when they are trying to survive this month, and they are not going to finance a $50,000 or $100,000 accounting solution on the iSeries--even if this might be the smarter move over a very long haul.

I suggested that if IBM can't make money selling such small iSeries servers, it might instead do a "rent-to-buy" deal, where small businesses access these accounting programs initially running on an iSeries-based utility, and when they have grown sufficiently to need their own internal servers, they will have experience with the iSeries and will be able to buy a machine. IBM could even discount the system acquisition based on how long a customer used the iSeries-based utility, thus rewarding them for their sticking with the platform. Shearer said that iSeries independent software vendors were offering application rental on iSeries utilities, and I said while this was true, it was niche players and was not something that IBM had put a lot of muscle behind in the way I was describing. The point is IBM needs a feeder system of some kind, whether it is literally a small machine or a slice of a big machine that customers rent. Either way, it has to be branded--and blatantly and shamelessly branded--as the iSeries.

Shearer and I chatted about a few more things, and then I went to talk to Sanchez. My opening comment to Sanchez, whom I have never met before, did not draw much of a smile, either. More of an extended blink, really. After I sat down next to Sanchez at a table where he was talking to a reporter from Reuters and another one from eWeek, I asked: "So what's it like to have the easiest job at IBM these days?" I may have said "easiest freaking job." I cannot precisely recall. I sure hope I didn't, but I wouldn't put it past me. At that point Sanchez just kind of stared at me for a second, trying to figure out who I was. The girl from Reuters choked on her sandwich. I thought my comment to Sanchez was funny, and, more importantly, kinda true. As Sanchez looked at me, the IBM spokesperson at the table introduced me as the most knowledgeable reporter in the Unix market, and seconds later, we all talked together for about 30 minutes about the Unix business. (If you want to know what we talked about, you'll just have to read our The Unix Guardian newsletter later this week.) I will toss this in from that conversation. In justifying my opening comment to Sanchez, I explained that there was no way anyone could convince me that Sanchez's job was anywhere near as tough as Shearer's was. I wasn't joking there, and Sanchez, being very careful with his words and body language, did not concede nor deny what is the obvious truth. IBM's Unix server business is doing great and is two to three times larger than the iSeries, which is growing again after some pretty tough years.

After that conversation, I was starving, so I wandered out to the buffet tables, which had a few scraps of food left. If you have never been to a press event, let me clue you in: the press shows up for food as much as for information, and they descend on the food like a pack of hyenas on a weakened beast culled from the herd. Eventually, Shearer wandered out, too, and looked for some food--having missed lunch as I had--and we stood there at the tables, talking about random things like normal people do and picking at the scraps.

Two things stuck in my mind as we stood there eating--he chose the gazpacho and some bread and deftly balanced a bowl on a plate, I picked some random half of a veggie wrap sandwich and then an excellent half sandwich of smoked ham on whole grain wheat. First, we both stood and talked and ate, ignoring the requests from the PR people that we sit down and be comfortable. We were both comfortable standing and eating, he explained. The second thing that stuck in my mind was this: He said that since he took over as general manager for the iSeries, he has spent 90 percent of his life on the road. "My laptop is my office and I spend nearly all of my time with customers," he said. "And it has given me a valuable and interesting perspective on the iSeries."

I am certain that this is true, and I wonder how many IBM managers can say this, general or otherwise. Shearer has a grueling schedule--how much of it is self-inflicted is unclear--and arguably the worst commute in the world. Unless, of course, you like your job, as Shearer clearly does.