Reader Feedback On Crazy Idea #483: A Leveraged Buyout Of IBM i
April 13, 2015 Hey, TPM
We’ve been sitting at least in the same church, if not in the same pew. Terrific article on the sellout of IBM i to private equity. I would make a couple of observations:
I am sure you will get some additional feedback, maybe even from the folks that populate some leafy, upmarket neighborhoods in the Hudson River Valley.
Happy to chat anytime.
I enjoyed your article speculating on a leveraged buyout of the IBM i business. I would love to see this happen. I’ve been dabbling in the IBM i ISV space for a good few years now, but I’d like to do more than dabble.
Unfortunately, getting an IBM i machine, with OS and compilers, is not quite the same as doing the same on any other platform. I’d like to think that a smaller company, dedicated only to IBM I, would be able to act faster and smarter than the IBM I’m dealing with.
Thanks for another interesting, perceptive, and provocative article.
The first item of interest is the number of AS/400 customers is now at 130,000 rather than 150,000, down from perhaps 300,000 in the late 1990s.
IBM has been focusing, if that is the correct word, for many decades on an ever smaller slice of the economic and financial pie, as is evidenced on its poor economic and financial results.
My newly published book, The Future of Corporate Computing, illustrates the reasons for this steep decline and illustrates how IBM and SAP can succeed and grow.
The huge gorilla in the room is the perhaps $10 billion annual cost of corporate in-house programmers (100,000 AS/400 installations times $100,000 cost with fringe per installation), with only one staff per installation. The actual cost is probably over $20 billion annually.
IBM gets none of that money, while the customers do everything they can to eliminate that $10 billion annual cost, by switching out of IBM in-house computing to cloud managed solutions and sophisticated vendor supported applications like SAP.
IBM simply must dramatically change its focus, if that is the correct word rather than mis-focus, to make its offerings innovative, cost effective, competitive, and appealing as is explained in my book.
–Paul Houston Harkins