But Wait, There's More

Power Windows? Just Tweak Virtual PC for Mac

A few weeks ago in this newsletter, we suggested that IBM take a serious look at partnering with Microsoft to port the Windows Server platform--either Windows Server 2003 or the future Longhorn Server--to the Power-based servers platforms, now known as the eServer i5 and p5. While our analysis of how that port might be easy, since IBM is already working on the future Power-based Xbox game machines (which will run a variant of Windows), we forgot another tack that IBM and Microsoft might take to accomplish the same task.

When Microsoft bought Connectix last year for its virtualization software (which is at the heart of its Virtual Server 2005 partitioning software), it got another program called Virtual PC for Mac. As that name suggests, this program allows a Power-based Apple Mac computer and allows it to run the full Windows XP operating system inside a virtual partition. It seems likely that adding the hardware extraction layer from Virtual PC for Mac to a Power-based version of Virtual Server 2005 would be fairly straightforward, and so would switching support from Windows XP to Windows Server 2003.

IBM Tweaks AS/400 7XX Trade-In Deal

IBM announced a trade-in deal in August that gave customers with aging AS/400 Model 7XX servers trade-in credits ranging from $1,000 to $80,000 on their machines if they bought a new iSeries or i5 server before September 31. The promotion offers trade-in credits ranging from $600 to $42,000 on server deals that occur between October 1 and December 31. (This was IBM's way of trying to encourage customers to buy an i5 machine sooner rather than later.) IBM tweaked the deal last week to add the new i5 Model 550 to the possible machines that can be acquired under the deal, and it is likely that it will soon add the i5 Model 595 to the list, now that this server has been announced. IBM also will allow the trade-in deal to be combined with other discounts and promotions, including leasing and financing promotions offered by IBM's Global Financing unit. This latter modification is probably the result of pressure by partners and customers that want to do deals but also want to get a little special treatment in the fourth quarter.

PeopleSoft, Oracle Haggle Over the Price

Looking at it from the outside, the merger of Oracle and PeopleSoft looks increasingly likely, at least based on the fascinating testimony of executives from both companies, as Oracle is suing PeopleSoft in Delaware Chancery Court to compel it to remove its poison pill. The testimony, which came in the wake of Craig Conway being fired as CEO of PeopleSoft, showed that Conway stretched the truth a year ago when he said that the Oracle situation was not affecting PeopleSoft's sales. However, as we wrote about in our coverage of Conway's firing, it seems more likely that Conway was released over technology issues, and PeopleSoft board member Skip Battle more or less admitted this in his testimony. According to Battle's testimony, which was reported in the Wall Street Journal, Conway was fired because he "had lost sight of the importance of technological innovation" and that PeopleSoft "was in danger of losing its collaborative work style."

As things stand in the dramatic hostile takeover bid, PeopleSoft has said that Oracle's $7.7 billion bid is not sufficient, and Oracle has hinted that it may come to the conclusion that PeopleSoft is not worth that much. In the meantime, Oracle fights on, trying to get the courts to force PeopleSoft to remove its customer assurance program, which would force Oracle to continue to support PeopleSoft programs or refund customers' license fees, and to get rid of the boosted compensation plans PeopleSoft has enacted to make it more expensive to acquire.

Offshoring Giants Tata, Infosys Profit Big-Time

Offshoring pays, if you happen to not be one of the programmers or managers whose job gets offshored. Indian outsourcing firm Tata Consultancy Services said that, in the second fiscal quarter ending September 30, it added 52 new customers and pushed sales to 24.3 billion rupees (about $530 million), and that the company broke through $1 billion in sales for the first six months of its fiscal year for the first time in its history. While revenues were up 43.6 percent in the quarter, net income rose by 51.8 percent, to $125.7 million. The company went public in August and raised $1.2 billion on the Bombay Stock Exchange in India.

Infosys Technologies, another big Indian offshoring house, is also seeing its sales and profits boom. Infosys also ended its second fiscal quarter on September 30 and is traded on the BSE. The company had sales of $379 million in the second quarter, adding 32 new clients and 5,010 employees, bringing its total to 32,949 employees. Net income was $97 million, up 49 percent.

Let's do a little math and turn these numbers around. Infosys brings in about $48,600 per employee, per year, at this run rate, which the company said that it can sustain in fiscal 2005. In calendar 2003, services giant EDS had 132,000 employees, who generated $21.5 billion in sales, or about $162,900 per employee. While these offshoring firms and EDS don't exactly equate, what's clear is that it costs a lot less to employ IT people in India doing sophisticated software and services than it does to do it here. Looks like a factor of 3.4 to 1. The question is, what can we do about it?

With Red Ink Mounting, ROI to Sell GO Software Subsidiary

Losses are mounting for software maker ROI, which last week reported financial results for its fourth quarter ending June 30, 2004, as well as its fiscal year 2004. The Kennesaw, Georgia, software company, which is looking to sell its Go Software credit-card transaction software subsidiary, says its total fourth quarter revenues increased 51 percent, to $3.1 million. However, the 162 percent increase in ROI's net loss, from $1.1 million to $2.9 million, more than exceeded the increase in revenue. For its fiscal year 2004, total revenues increased 35 percent, from $7.9 million to $10.6 million. Without counting the acquisitions or the results of Campana Data, which was closed in October 2002, the revenue increase is reduced to 25 percent, ROI says. The net loss for fiscal year 2004 amounted to about $6.0 million, an increase of $2.8 million, or 91 percent, compared with the $3.1 million loss in 2003. ROI says that it has received several offers for GO Software, which it officially put on the block on September 27. After disposing of the subsidiary, ROI plans to focus its efforts on selling software used by the construction industry. The company, which is traded on the Over the Counter Bulletin Board, has made three acquisitions in this space, and unified them under its Tectonic subsidiary. "This was a very eventful year for us. . . . We are nevertheless excited about our prospects for the future as we focus our resources in the area we know best," said ROI president and chief executive, Arol Wolford.

Misys Unveils Upgrade Path for OS/400 Banking Software

The line between banking and retail businesses is blurring, according to Misys Retail Banking Systems, a division of the English financial services software firm Misys. The company last week announced a new strategy and banking software architecture to address the changes. The new architecture, called Equation Plus, is based on Misys Retail Banking Systems' legacy Equation retail banking application, which is used by 200 institutions and runs only on OS/400. The new Equation Plus product, however, will be written in Java and available on Unix as well as OS/400 platforms, giving users the choice of DB2/400 or the Oracle 10g database. Equation Plus also features market analytics through the Misys Enterprise Platform, which is powered by software from S1. New business process management and rules engines will also be a part of the Equation Plus platform, enabling banks to create their own decision-making processes. CRM software will be pre-integrated with Equation Plus and delivered in the first quarter of next year. The Equation Plus software itself will be shipped to customers throughout the year, Misys says, while the process management and rules engines will be on the tail end of the roll out.

Lakeview Joins IBM Banking Industry Network Program

Lakeview Technology recently announced that it is participating in a new IBM PartnerWorld program designed to help ISVs in specific industries. As a member of IBM's Banking Industry Networks program, Lakeview received assistance in optimizing its MIMIX high availability software to work with IBM's banking solutions and middleware offerings, the Chicago software vendor says. "The data must be accessible in a way the bank, customers and regulators need it," says Terry Lewis, Lakeview's vice president of marketing. "The business demands it and now laws like the Sarbanes-Oxley Act require it." IBM has new industry-specific network programs for eight different industries and plans to introduce more this year.