Reseller Mainline to Acquire Competitor Cornerstone

May 27, 2008 Timothy Prickett Morgan

The consolidation crunch in the server reseller space continued last week as Mainline Information Systems of Tallahassee, Florida, acquired fellow reseller Cornerstone Systems, of Irvine, California. The combination of the two firms brings together two of IBM‘s largest server resellers and two companies with particular expertise in mainframes and Power-based servers.

Both companies have unashamedly referred to themselves as “True Blue” resellers, and focus exclusively on IBM’s servers, operating systems, databases, and middleware or software that is officially pushed by IBM itself, such as Linux or VMware‘s ESX Server hypervisor for X64 iron. Mainline has also used the capacity on demand features on IBM’s mainframe and Power systems to deliver utility-style pricing for systems to its customers, something a lot of resellers have not figured out how to do–and which is very difficult with X64 machines because these processors (whether they are from Intel or Advanced Micro Devices) have not yet been architected for capacity on demand, even if they do have power conservation techniques such as frequency scaling. (Yes, this is a serious shortcoming.)

Mainline has long been IBM’s biggest reseller of System z mainframes, which still have that name, and Cornerstone is another big mainframe player, too. And as such, the two companies pitched the acquisition as a win-win for the mainframe customer base. But that doesn’t mean Power Systems and, to a lesser extent, X64 servers are not part of the merged company’s customer base. Mainline has for years been one of the largest resellers of AS/400, iSeries, and System i gear, too, for instance. Both Mainline and Cornerstone are premier business partners, which is the highest ranking you can get from Big Blue aside from the master IBM system resellers, Arrow Electronics and Avnet, who in turn distribute gear to resellers such as Mainline and Cornerstone.

“As ‘True Blue’ partners, both Mainline and Cornerstone provide comprehensive technology solutions based only on industry-leading IBM platforms,” explained Rick Kearney, Mainline’s president and chief executive officer, in a statement announcing the deal to buy Cornerstone. “This acquisition allows us to combine nearly four decades of experience, the expertise of the industry’s best System z technical professionals, along with nearly 700 employees who focus on delivering infrastructure solutions, such as business continuance, virtualization, security, and optimization to our clients.”

Mainline was founded in 1989 as an IBM partner focusing on the AS/400 in the wake of the launch of the platform, and gradually expanded to cover IBM’s other platforms and carved out a niche with the mainframe platform when other smaller players were driven out of the market by certification requirements, the implosion of the two big mainframe lessors (El Camino Resources and Comdicso), and the withdrawal of Amdahl and Hitachi from the market in the late 1990s. Throughout all of that wrenching change, Mainline kept its mainframe practice expanding.

Cornerstone, founded in 1990 by owner Herb Chittum and the company’s current president, similarly carved out a niche in the mainframe space while also peddling the entire IBM systems portfolio, and interestingly is a reseller of Fundamental Software‘s FLEX-ES mainframe emulation software on IBM’s own System x servers, which it sells as the zFrame product line. Cornerstone has installed over 800 mainframes since its founding (that’s a lot) and has plunked in over 100 FLEX-ES zFrame machines in the past year, according to the company Web site. Cornerstone Systems is not to be confused with CornerStone Business Systems, an OS/400 consulting company with expertise in modernizing legacy applications on that platform.

Kearney and Chittum said in the statement that they will spend the next few weeks putting together an integration plan for the companies, and they intend to keep on the staff at both firms and operating their existing facilities, which do not have any geographical overlap. Cornerstone has 95 employees, while Mainline has more than 600 employees.

The amazing thing is that neither Mainline nor Cornerstone have been snapped up yet by Sirius Computer Solutions, the largest reseller of System i and System p (now Power Systems) iron among IBM’s partners and the second largest (after Mainline) seller of mainframe iron. Sirius, which is based in San Antonio, was founded in 1980 and in November 2006 got an equity investment from private equity firm Thoma Cressey Bravo, which has invested over $100 million into various System i-related companies, notably high availability software maker Vision Solutions and its iTera and Lakeview Technology acquisitions and Sirius and its several recent reseller acquisitions.

Sirius Expands Northeast Presence with SCS Buy

Sirius Computer Builds Out Biz With DyComp Acquisition

Sirius Gets Equity Investment from Thoma Cressey

BI on Linux Gets the Attention of IBM eServer Resellers

Partnerships! Partnerships! Partnerships!

                     Post this story to del.icio.us
               Post this story to Digg
    Post this story to Slashdot

Tags: Tags: mtfh_rc, Volume 17, Number 21 -- May 27, 2008

Do the Math When Looking at IBM i Hosting for Cost Savings

COVID-19 has accelerated certain business trends that were already gaining strength prior to the start of the pandemic. E-commerce, telehealth, and video conferencing are some of the most obvious examples. One example that may not be as obvious to the general public but has a profound impact on business is the shift in strategy of IBM i infrastructure from traditional, on-premises environments to some form of remote configuration. These remote configurations and all of their variations are broadly referred to in the community as IBM i hosting.

“Hosting” in this context can mean different things to different people, and in general, hosting refers to one of two scenarios. In the first scenario, hosting can refer to a client owned machine that is housed in a co-location facility (commonly called a co-lo for short) where the data center provides traditional system administrator services, relieving the client of administrative and operational responsibilities. In the second scenario, hosting can refer to an MSP owned machine in which partition resources are provided to the client in an on-demand capacity. This scenario allows the client to completely outsource all aspects of Power Systems hardware and the IBM i operating system and database.

The scenario that is best for each business depends on a number of factors and is largely up for debate. In most cases, pursuing hosting purely as a cost saving strategy is a dead end. Furthermore, when you consider all of the costs associated with maintaining and IBM i environment, it is typically not a cost-effective option for the small to midsize market. The most cost-effective approach for these organizations is often a combination of a client owned and maintained system (either on-prem or in a co-lo) with cloud backup and disaster-recovery-as-a-service. Only in some cases of larger enterprise companies can a hosting strategy start to become a potentially cost-effective option.

However, cost savings is just one part of the story. As IBM i expertise becomes scarce and IT resources run tight, the only option for some firms may be to pursue hosting in some capacity. Whatever the driving force for pursing hosting may be, the key point is that it is not just simply an option for running your workload in a different location. There are many details to consider and it is to the best interest of the client to work with an experienced MSP in weighing the benefits and drawbacks of each option. As COVID-19 rolls on, time will tell if IBM i hosting strategies will follow the other strong business trends of the pandemic.

When we say do the math in the title above, it literally means that you need to do the math for your particular scenario. It is not about us doing the math for you, making a case for either staying on premises or for moving to the cloud. There is not one answer, but just different levels of cost to be reckoned which yield different answers. Most IBM i shops have fairly static workloads, at least measured against the larger mix of stuff on the public clouds of the world. How do you measure the value of controlling your own IT fate? That will only be fully recognized at the moment when it is sorely missed the most.

CONTINUE READING ARTICLE

Please visit ucgtechnologies.com/IBM-POWER9-systems for more information.

800.211.8798 | info@ucgtechnologies.com

Article featured in IT Jungle on April 5, 2021

Admin Alert: Monitoring the Monitors More Power Transitions Are on the Way

This Issue Sponsored By

Table of Contents

Content archive

Recent Posts

Subscribe

Pages

Search