New Director of System i Sales for BPs, ISVs Appointed
June 26, 2006 Timothy Prickett Morgan
IBM last week announced that it has appointed a new director of sales for the System i platform with regards to the business partner and independent software vendor channel. As has been the case for a number of years, Peter Small, who starts work this week, hails from IBM’s Unix sales team, and Big Blue is hoping that the experience that Small has will help the company and its partners better peddle the i5/OS platform.
A year ago, Mark Shearer, general manager of the System i division, appointed Bill Donohue as vice president of worldwide sales for the product line. Small has not replaced Donohue, but rather works for him, specifically interfacing with the reseller partners and the ISVs that are more or less responsible for about 85 percent of OS/400 and i5/OS platform sales each year.
“Peter was tremendously successful in his previous position leading and developing the worldwide sales teams responsible for the System p business,” said Donohue in a statement accompanying the announcement. “On a personal level, I worked with Peter back when he ran the System p Americas team and saw first hand the enormous impact this man made, taking Unix market share from last to first. I passionately believe he will do the same to System i.”
I like Donohue, and I think he has one of the toughest jobs in the world, but that last sentence made me cock my head to the side, like an old hound dog that heard something funny while sitting on the front porch. First of all, strictly speaking, the i5/OS platform is already first among its peers. Hewlett-Packard has killed off the MPE platform and its HP 3000 server line, and while it has kept alive the OpenVMS platform on its Integrity server line, I have a hard time believing that OpenVMS is generating as much revenue as the i5/OS platform does–even after the substantial declines of the past six years in iSeries and System i5 sales. IBM’s baby mainframes and entry machines from Unisys, because they support COBOL, are sometimes competing with the System i5, but I would guess that every time, it is because a mainframe shop is looking for a way to get off an expensive mainframe and onto a less expensive COBOL box, which the System i5 certainly is. To put it bluntly, the System i5 is already first among its peers.
Small has an MBA degree from Pace University, with a specialty in international financial management, and started working at IBM in 1984. He has been the Americas pSeries sales executive, the Western region pSeries business unit executive, Americas hardware and software profit planning manager, Northeast area trading CFO, and market operations manager. The important thing is that he has developed the sales teams for the pSeries, now the System p, line. In his official IBM bio, Small was credited with $1 billion in pSeries sales and $400 million in profits. This data, in and of itself, is interesting. That shows pSeries having a 40 percent profit margin, and presumably this is operating profits (before taxes), not after tax profit. But who knows? The point is this is a big number.
But here’s the problem that I see in even saying it that way at all. There is a danger in all technology companies in confusing technology that is great and helps sell itself from technology that was not great and needs help to be sold. This has been particularly true with Sun Microsystems and IBM with their respective Unix business, and it is true with the AS/400, iSeries, and System i.
I remember when Sun was experiencing 20 percent revenue growth a year and it had a market capitalization above $200 billion, when the dot-com boom was roaring. Sun got lucky when it bought Cray‘s 64-way SMP server business in 1996. It suddenly had a big server that could take on the dot-com load, and being one of the original Silicon Valley firms, became the default local platform recommended by venture capitalists–many of whom got rich when Sun went public in the 1980s and its sales exploded in the 1990s. Sun had the right iron at the right time in the right location and was running with the right crowd, but it was foolish to confuse sales with taking orders. Sales are when you have something someone doesn’t know they want, and you have to sell it. In the early 2000s, IBM had Unix servers with dual-core Power processors that it sold at half of list price in competitive situations, machines that offered stunning price/performance compared to alternatives from Sun and HP. It is no wonder that IBM ate so much market share. It is logical, and the relative portability of Unix workloads is what made this possible. Sales people helped, to be sure. But IBM was taking orders more than it was selling its Unix boxes. Prior to this, when IBM’s Unix machines were not as good, I can assure you Big Blue had to do a lot more selling.
The OS/400 and i5/OS platform is different from Unix, and its value proposition is much harder to quantify. It is a push product rather than a pull product. And while I think IBM’s System p team probably has a lot of ideas about how to organize itself and be aggressive, it remains to be seen if that Unix experience actually helps the System i5 make its case. Turning from a push to a pull product seems to be the key, and whether IBM likes to admit it or not, its success in the Unix market was driven mostly by technology and aggressive pricing. Having said that, having young, motivated people promoting the platform and energizing the direct sales team and reseller and ISV channels is never a bad thing.
Anyway, Small was on vacation last week, but I hope to talk to him this week to pick his brains about how to ramp up channel sales for the System i.