CSC Offers Trade-Ins to iSeries Shops Buying i5s and Fast400
November 15, 2004 Timothy Prickett Morgan
It’s the fourth quarter, the traditional time in the computer business for companies to make their best deals as they get the gear they need for the coming year. With many OS/400 shops making plans for their iSeries and i5 servers, California Sales Company, the distributor in the Americas region for the infamous Fast400 5250 governor buster, is upping the ante on an IBM trade-in deal to try to encourage customers to buy a new eServer i5 and to use Fast400 on it.
CSC burst on the scene in August as the new reseller for the Fast400 product; at the same time, Jim Stracka, founder of the company that created the Fast400 tool, sued IBM and was seeking damages for injury to his feelings, reputation, and character, as well as for mental anguish, lawyers fees, lost business opportunities, and having been falsely charged for a criminal offense and incarcerated falsely. At that time, Ron Lerma, vice president of sales and marketing at CSC, said that his firm, which is located in Bakersfield, California, had been given the rights to distribute Fast400 in North America, Mexico, Central America, and South America. The company also raised the price of the Fast400 tool to $2,000 per processor per year. (Storage Solutions Group, the Manx company that sold Fast400 for years, was charging $1,500.)
Back in August, Lerma said that he was distributing two versions of the Fast400 tool: one that works on Power-based AS/400 machines running OS/400 V3 and V4, and another that works on Power-based AS/400, iSeries, and i5 machines running OS/400 V4 and V5. Lerma had tested Fast400 on OS/400 V5R1 and V5R2 at that time, and said that Stracka had told him that Fast400 works in activating latent 5250 capacity on the new eServer i5 machines as well. But CSC had not yet tested it on i5/OS V5R3 on the new i5 iron. With this new trade-in deal, Lerma is confirming that Fast400 does indeed activate latent 5250 capacity, which means it can, in essence, turn an i5 server running OS/400 Standard Edition into one running OS/400 Enterprise Edition. Whatever holes Stracka is exploiting down below the AS/400’s Technology Independent Machine Interface (TIMI) to activate 5250 processing are apparently still wide open. This is probably making IBM very unhappy.
At any rate, because CSC wants to sell Fast400, the company has announced that it will match the trade-in deals that IBM currently has for customers with AS/400 Model 270s, and that it will add another 10 percent to those trade-in credits, if customers buy a new i5 server running i5/OS Standard Edition and put Fast400 on it. IBM’s trade-in credits for the Model 270 deal vary according to the Model 270 you have. They range from $2,000 (on a Model 270 with processor feature 2248 and interactive feature 1517) to $17,500 (on a Model 270 with processor features 2253 or 2434 with interactive feature 1520). In the wake of the eServer i5 launch, IBM started giving pretty decent trade-in credits on the Model 7XX machines until the end of September. Customers buying a new iSeries Model 8XX or i5 Model 5XX server could get a credit ranging from $1,000 (for an entry Model 720) to $80,000 (for the biggest Model 740). The credits now range from $600 (for the Model 720s) to $48,000 (for the Model 740s); they expire December 31. CSC is not matching this trade in deal. Lerma says that it is very difficult to resell such 7XX equipment, and therefore it is not worth CSC’s while. CSC will, however, give fair market value for companies that trade in iSeries Model 820, 830, and 840 servers as part of the Fast400 deal, since there is a viable market for such second-hand machines.
CSC says that it will match IBM’s trade-in credits on Model 270s and then up the ante by another 10 percent, but its deal only applies to customers that acquire a new i5 system and agree to demo and then install Fast400 on that i5. CSC is not giving the deal to customers that buy secondhand or new iSeries 8XX iron (unlike IBM in its deals), but it is not requiring that customers buy their eServer i5 from CSC or from any particular iSeries reseller. You just buy the i5 from whoever you want. You may be thinking that you can get the trade-ins from both IBM and CSC, but because either IBM or CSC is going to take possession of the old kit, you can’t double up on the deal. For some reason, CSC is only offering this deal to customers that buy rack-mounted i5s, rather than the entry Model 520 Express tower configurations. (This is probably something that can be negotiated, considering that a tower Model 520 is big enough for a lot of OS/400 shops.)
The Fast400 trade-in has to include any disk expansion cabinets, memory and disk features, and other electronics that are in the Model 270 or 8XX server, too. But, again, if you have a heavily configured machine, you should insist on a higher trade in, whether you take the IBM or CSC deal. Often, the value of the features in an OS/400 server far exceeds the value of the base server. The CSC deal is only available in the United States, and customers have to ship the old system back to the company within five days of the arrival of the new eServer i5, at their own cost. That shortness of time and the shipping cost may end up being a deal-breaker for a lot of companies, particularly since IBM does not charge customers shipping for its trade-in deals. The cost of shipping a Model 820, for instance, might exceed the trade-in value in the Fast400 deal.
I have spent months analyzing IBM’s eServer i5 pricing, and, as you know from reading these stories, a large portion of the value of an i5 server is its green-screen processing capacity. When IBM is charging hundreds of thousands of dollars for Enterprise Enablement features, spending $2,000 per processor per year is already a considerable savings. It is hard to say whether this trade-in will stimulate Fast400 sales more than the basic economics of eliminating the green-screen governors already does. But CSC is obviously trying to sweeten the deal a little bit for those customers that are wary of buying Fast400. In the end, this deal may simply give CSC some used AS/400s to sell as it gives away its Fast400 software to customers. In effect, customers are trading old iron for software that will purportedly allow them to forgo spending a lot of money on 5250 capacity on Model 520, 550, 570, and 595 servers. On the entry Model 520 servers running OS/400 Standard Edition, unlocking that latent 5250 capacity in base configurations can save companies anywhere from $36,000 to $116,000; getting around having to pay for additional Enterprise Enablement features could save them another $50,000 on top of that. On big i5 servers, the amount that Fast400 can save customers increases to anywhere from $92,000 to $238,500 for base machines, and anywhere from $300,000 to $500,000 to activate the full 5250 processing capacity of a Model 550, 570, or 595. This is big money, and IBM has to be furious that Fast400 is still around.