California Software, Unisys Chase OS/400 Base

by Timothy Prickett Morgan

AS/400 application rehosting software maker California Software announced last week that it has signed a global agreement with server maker Unisys under which the two will work together to promote an alternative to IBM's iSeries and i5 OS/400 platforms. While most OS/400 shops are not interested in a clone OS/400 and RPG environment running on Windows, Unix, or Linux at any given time, there are always a few who are.

I have seen quite a number of attacks on the AS/400 base in 15 years, most notably those by Hewlett-Packard and Sun Microsystems as they were looking for new markets for their Unix boxes before the dot-com bubble materialized. The mainframe base gets similarly assaulted from time to time as well, so OS/400 shops should not feel singled out. Because the OS/400 customer base is large, with about 225,000 sites and 500,000 installed machines, it is always an attractive target for makers of other server platforms. At any given time, there are thousands of companies that have merged with others (which may not have AS/400s) or are looking to consolidate onto fewer and more popular (but certainly not better) platforms. This is how California Software stays in business selling its InfiniteiSeries, BABY, and Unibol OS/400 application rehosting environments.

In late 2000, Unisys hitched its ES7000 server wagon exclusively to Windows 2000 Datacenter Server, arguably before that software was ready for prime time. The ES7000s borrow from Unisys' Sperry and Burroughs mainframe product lines, and were the first enterprise-class Wintel servers, spanning up to 16 and then 32 processors in a single-system image. (The machines now support Xeon and Itanium processors.) At first, Unisys was content going after Windows shops that were tired of server sprawl and wanted to consolidate, or that simply needed bigger Windows boxes than HP, IBM, or Dell could supply, because their workloads needed more than four or eight processors of power. While Unisys has secured a big portion of the high-end Windows market, in order to keep growing it had to launch a Unix replacement marketing campaign in conjunction with Microsoft more than a year ago. And a few weeks ago, at LinuxWorld, as we reported in The Linux Beacon, Unisys, which had been telling me for 18 months that it did not need to support Linux on the ES7000s, conceded that it did indeed need to do that because some customers now want high-end Linux servers, not Windows servers, as they are replacing Unix boxes. This stands to reason, since Linux is a close cousin to Unix and bears little in common with Windows.

So the partnership between California Software, the last remaining OS/400 rehosting software supplier, and Unisys, a server maker looking to attack new markets, was inevitable. The two companies, oddly enough, have some history. You see, Unisys, the venerable mainframe maker and former Unix server maker, used to run AS/400s internally.

Yes, that is odd, and there was a good reason for it. When Larry Weinbach took the helm of Unisys in 1997, he was CEO of Andersen Worldwide (which would eventually split into two pieces, an accounting firm and IT services firm). At that time, he wanted to change Unisys from being a mainframe maker and an also-ran in the Unix and PC server businesses into a mainframe maker with a large services business. (Sound familiar?) The strategy worked, but to get the expertise it needed in services, Weinbach made Unisys deploy its own applications on various kinds of servers, including AS/400s. According to Don Montgomery, director of services marketing at Unisys, when the ES7000s were ready to be announced in 2000, the company needed expertise in moving applications to Windows and decided to once again learn how to do it by moving the Unix and OS/400 applications in its own data center onto ES7000s running Windows. To move its OS/400 applications to the ES7000s, says Montgomery, Unisys acquired rehosting software from California Software.

Montgomery says that he does not want what Unisys is doing to be misconstrued. Unisys is not building a special business to attack the OS/400 server market but, rather, is partnering with a vendor that sells an OS/400 rehosting environment so that its general business of providing services and servers for customers that want to consolidate onto Windows or Linux can address the needs of OS/400 shops that might decide, however much we OS/400 zealots might wish otherwise, to move to another platform. "Obviously, there is an enormous base of AS/400s out there," says Montgomery. "But the financial argument for the ES7000, compared to the AS/400, is not as compelling as it was, compared to Unix servers, since the AS/400 has a reputation for lower total-cost-of-ownership."

(Incidentally, there is no rehosting environment for the VMS operating system used on HP's VAX and AlphaServer machines, and Sun owns and controls one of the two major rehosting environments for MVS and CICS on mainframes. Fundamental Software and its FLEX-ES mainframe hardware emulation for X86 servers still exists, but you have to license IBM operating systems and middleware for it.)

Bruce Acacio, CEO at California Software, says that Unisys has begun seminars in Asia, in Europe, and in the Americas to educate customers about how the OS/400 rehosting environment can be run on either Windows or Linux on the ES7000s. But the new partnership between the companies seems to be driven by need. Unisys needs more ES7000 server customers, and California Software, which has mostly focused on selling to smaller OS/400 software vendors that want to support their applications on Windows or Unix as well as OS/400, tries to sell into larger accounts through partnerships with EDS and Capgemini. Acacio says that interest in OS/400 rehosting is picking up, which might mean that IBM is significantly dropping the cost of OS/400 servers just in time.

"Three years ago, we were begging people to consider such a move and they were yawning," says Acacio. "Today, people seemed to be concerned with the future of the iSeries platform. And we're not calling them; they are calling us." He says that he gets about 50 customers inquiring about rehosting a week. This is a significant flow.

California Software has done about 15 very large OS/400 migrations each at both EDS and Capgemini in the past year. These were at financial services and government installations, and he characterized these as very big deals. While the partnerships with independent software vendors make up the vast number of licenses to its software, Acacio estimates that the big deals done with EDS and Capgemini accounted for more than half of its revenue in that time. The remaining 40 percent of revenue came from software vendors that license its software, with another 10 percent or so coming from users who rehost their own applications.