The Four Hundred--Do You Upgrade or Trade In that Old AS/400?

If IBM had the answer to this one question, maybe it could decide what to do with the iSeries. How do you quickly convince 80 percent of the OS/400 installed base to move up from old AS/400s and join the modern iSeries world? Traditional IBM upgrade paths for those boxes have been left in the dust, but plenty of those machines are operating quite nicely with upgrades provided by companies that specialize in keeping the old iron running as good as new.

The original Green Streak promotion, circa 2002, was designed specifically to crack this nut. You could say it was successful up to a point, but there is an ocean of OS/400 shops out there and the voyage is just underway. To be fair, Green Streak could have done better than it did had it not come at a time when IT expenditures were tighter than Sam Palmisano's dancing shoes. Now, with predictions of an improving economy, comes Green Streak II, which once again provides the type of price breaks that can persuade customers to give up the old and get with the new.

Green Streak II makes a very attractive case for buying a new iSeries Model 810 for high availability, and it provides the kind of price incentives that IBM is giving to customers who buy iSeries for Capacity BackUp and iSeries for HA servers, which are based on iSeries Model 825, 870, and 890 servers and which have price breaks when they are used for HA applications. (A year ago, the best deals were being made on the Model 270 and Model 820 machines with the Green Streak promotion, and the revamping of the iSeries line in January 2003 essentially brought Green Streak pricing across the whole line at list price.) It isn't so hard to make the case for server consolidation on the new machines at the new 2003 pricing, and many OS/400 shops that have multiple AS/400s can justify making the move to a new iSeries box. The elimination of maintenance fees, software licenses, and lowering of the processor group by one or maybe two tiers, can add up to some persuasive numbers, the kind that make a purchase decision pretty much a no-brainer.

On the other hand, a lot of those older AS/400s are paid for and they just keep running and running. In a shop where there is a single AS/400 running line of business applications, the need to toss aside that box in favor of a new one often does not pencil out. Adding processing power, from dealers who trade in AS/400 parts, is cheap and there is often no need whatsoever at the company for new technology such as logical partitioning, workload balancing, and Web serving. The fact is, many small businesses cannot take the expense of constantly upgrading every three or four years, and for that matter they have found it to be comfortable staying with technology for 7 to 10 years, or even longer. Customers using vintage AS/400s are not necessarily impressed with the new capabilities. It's not critical to them. They just want to continue doing what they always have done.

With no IBM-sanctioned upgrade path for those shops with machines that date back to the latest models in the System/36 line and also include the old B, C, D, E, F, 2XX/3XX, 4XX/5XX, 6XX/SXX families of AS/400 servers, and now the AS/400 7XX boxes, it is easy to see how IBM became increasingly detached from those customers. At this point, those customers are far better acquainted with the firms that have helped them keep those older boxes running than they are with any representatives of IBM. That's why IBM believed it was necessary to reconnect with those customers. In retrospect, IBM may have shot itself in the foot because it made the AS/400 so damned reliable and stable.

So if the customer is happy with a highly reliable and completely paid for server, and he knows that processor upgrades are available if needed, then what is IBM to do with these customers?

"Some of these conversations about what the iSeries can do may be premature today," says Richard Allan, director of iSeries marketing for Key Link Systems Group of Agilysys, "but IBM believes the vast majority of these companies will be doing these things at some point in time. They have to plant that seed early. In some cases it will take a while for that seed to germinate and grow. You can't let the people with the older boxes and green screen applications forget that the iSeries has all these capabilities." Key Link is a value added reseller for IBM's iSeries line as well as a reseller for other hardware and software vendors.

The percentage of the AS/400 and iSeries 500,000 boxes out there in the world that are still running green screen applications is high, and many will eventually need to increase capacities and capabilities. The question is, when does that business need occur? IBM is encouraging those organizations to make the move sooner rather than later; the company also wants to demonstrate that staying with the iSeries and making use of such things as on demand computing is the way to create a competitive advantage.

The small companies, which may not be looking at the bigger picture, have to ask themselves tough questions, Allan says. How are they going to survive in a society that is increasingly driven by e-business and the Internet? How are those companies going to build a structure for this eventuality? IBM's business partners in the sales channel have to force that creative thinking.

"It's not just a line-of-business box," Allan says. "It is an SMB central server that can service a lot of different functions, one of which is the consolidation of Intel servers." As he sees it, the AS/400 was originally sold into many organizations on the basis of being a line-of-business server. The people who made those buying decisions were oriented towards green screen, vertical applications. The message now is much broader and more complex. It includes workloads, consolidation, Web serving, and collaboration. It's a message that the people in charge of line of business applications, the sales channel partners, and IBM need to take to the top-level executives responsible for an overall, company-wide vision.

"It's not an issue of whether there is an upgrade path available," Allan says. "The issue is what can this new technology do for you. The issue has to do with capabilities and benefits. The end point is the issue. Do you, a long-time AS/400 customer, see and go along with the vision IBM is explaining for the iSeries or not?"