In The IBM i Trenches With: Computer Plus
March 29, 2021 Timothy Prickett Morgan
Welcome to a new series in The Four Hundred called In The IBM i Trenches.
We spend a lot of time talking to people at IBM and at the key suppliers of systems software, application software, and development tools for the IBM i platform. But the ecosystem is a lot bigger than these players. There are thousands of resellers, each serving tens to hundreds to sometimes thousands of customers, depending. There are suppliers of third party maintenance as well as technical support and all kinds of programming and system management services. And there are an increasing number of hosting and cloud computing suppliers.
Even though the revenue stream from the IBM i platform has been shrinking for a lot of reasons, these business partners we have outlined above continue to do lots of business and continue to help IBM i shops keep their systems and applications humming. We want to give these companies, many of which are small, family-owned businesses, some love and so we are going to be profiling them on a regular basis starting now.
This week, we are talking to Computer Plus, a provider of third party maintenance and other services for Power Systems running IBM i since it was founded by father-son team Glenn Yarborough and his son David at the dining room table, as the younger Yarborough put it “with $4,000 in cash and a whole lot of fire in our bellies” back in 1989 in the wake of the announcement of the AS/400 the prior year. (This is also when we founded The Four Hundred, coincidentally.)
Computer Plus was founded in Greer, South Carolina, way back then, and while the offices have moved a few times and the company now has national and international customers across its installed base of thousands of customers, rather than just a focus on doing business in the Carolinas, it remains in Greer. For those of you who know the area (being in the Blue Ridge Mountains myself these days, I am), Greer is halfway between Greenville and Spartanburg, with Asheville, North Carolina and all of the hip mountain satellite towns around it like Saluda, Black Mountain, Brevard, and Highland all within a short driving distance to the north. Facebook’s datacenter in Forest City is about an hour to the northeast, too, thanks to the cheap power and water – both of which are necessary for a hyperscale datacenter.
Which is why I can see the Google datacenter 30 miles down mountain from my office window in Lenoir, North Carolina, as below on a very stormy Sunday as I write this:
That white stripe in the center of the picture is the pair of Google facilities in Lenoir. And if I squint real hard I can almost see the massive solar panel field for the Apple datacenter in Maiden, North Carolina another 30 miles further down into the Piedmont.
Anyway, Computer Plus is currently located right off Interstate 85, which links Montgomery, Alabama to Richmond, Virginia, adjacent to the Greenville-Spartanburg International Airport.
Like other IBM business partners back in the day, Computer Plus has changed its business over time.
“We used to just resell IBM equipment, but then we found out we were pretty good at service,” says Yarborough the younger, who is chief executive officer at the company with Steve Robertson as its vice president of sales. “We actually cut our teeth on IBM 5362s, the “Compact 36” as it was called after it was announced in 1984, and we were selling them like hotcakes. And then we moved over to the AS/400 and grew the business to become one of the premier third party servicing companies in the country. At one point in time, I know that in the Carolinas at least, we have more AS/400s under maintenance and service than IBM itself did.”
Just for fun, as a flashback, if you go out onto eBay right now, you can find more than a few of the System/36 Compact machines for sale – here is one with the manuals for $3,900 and here is another one for $3,900. With PayPal Credit financing, you can have these vintage deskside System/36 Compacts for a mere $163 per month for 24 months. That’s pretty good value for a machine that is 37 years old. . . .
Which is one of the points that the folks at Computer Plus agree with us about. We have always said that we think there is a lot more vintage iron out there than anyone – particularly IBM and the big resellers of systems and application software for the OS/400 and IBM i base – wants to admit. We have never been bothered by the persistence and perseverance of these venerable machines. All we keep saying, over the decades, is there should be a way to literally have a virtual System/36 5362 with a containerized SSP operating system running unchanged inside of IBM i for those people who cannot, for technical and/or economic reasons, move their software ahead. Let it run at crappy utilization and save the customers the grief. They will pay the premium for the hardware.
There is an interesting dynamic going on in the market right now, says Robertson, looking over the long history of Computer Plus from those System/36 and AS/4300 salad days up until today.
“There are fewer machines out there as far as the AS/400 and their follow-ons go, but there is a larger need for third party rather than IBM maintenance on those systems,” says Robertson. “And also the systems, even when customers are buying them new from IBM, are cheaper so the maintenance, as a consequence, is also less expensive. Overall, in our business, we have fewer systems that drive less money, but we also provide coverage for all of the devices that attach to the machines. A huge part of our business now, in contrast to way back when we started, is that we are doing peripherals as well.”
You might be wondering how a small company just outside of the metropolitan Charlotte area (which spans North Carolina and South Carolina and which has close to 3 million people living in it) can have a national and now international third party support maintenance business. Here is how it works. Computer Plus gets the parts for machines and warehouses them and has the deep expertise and it send those parts by express shipping (Charlotte Douglas International Airport is the sixth largest airport in the world if you rank it by the number airplanes that are moving in and around the airport).
“We have partners all over the world that do the labor for us while we supply the backend support and the parts,” explains Robertson. “And with a lot of resellers that sell machines that you know, we are the support for their machines. They may hold the paper on the support agreement, but they subcontract it to us. A huge percentage of our business is subcontracted through channel partners. So we are very heavy in that market, too.”
One of the reasons I wanted to talk to Computer Plus is to do a reality check and get a better sense of the composition of the AS/400, iSeries, System i, and IBM i on Power Systems base out there in the real world. I contend that the kind of data we see in surveys from the big systems and development tool suppliers in the IBM i market skew towards those who are on relatively modern Power Systems hardware and IBM i software. Data from companies like Computer Plus when averaged out with data from companies like HelpSystems might provide a more accurate view of the actual installed base.
Yarborough and Robertson have a good laugh about this, particularly given the colorful language I often use in my interviews. For effect, mind you.
“We signed up a system for support yesterday that a partner was putting into a company, and it was for a Model 9406-270,” says Yarborough. “We have systems that are running OS/500 V5R1 and OS/400 V5R3 as well as IBM i 7.1. We have people that are using old systems, and they work fine for them, and they don’t have any reason to move off of them – as long as we can get parts, we can service them. There are a lot of great parts suppliers around the country and there are a lot of vintage parts out there, and as long as we can get those parts, we can keep companies with old machines under contract. And when we can’t get parts, we don’t renew the contracts. I have a customer who runs a nursery in Spartanburg that still has a System/36 that we took off contract two years ago because we can’t get parts for the machine. I called them up the other day, just to check in, and they said the System/36 was running fine and they are having no problems.”
If IBM had planned obsolescence with the System/36 and AS/400 and iSeries and System i machines, it did a really, really terrible job. (That was a joke, folks. . . . )
IBM moved off the CISC AS/400 processors and over to PowerPC AS processors in 1995, and Yarborough estimates that anywhere from 20 percent to 25 percent of the customers who are buying third party maintenance services from Computer Plus are running on systems using those CISC processors. Just for fun, let’s call it 20 percent. Let’s estimate that another 20 percent are running machines Power4, Power4+, Power5, Power5+, Power6, and Power6+ processors, which were new between 2001 and 2009. Of the base of machines that Computer Plus is supporting, Yarborough says that the Power5 through Power6+ machines are the largest portion of its base.
If you look at the data from the IBM i 2021 Marketplace Survey from HelpSystems, data gathered in October 2020 for that survey report indicated that 15 percent of those companies polled had Power6+ or earlier processors. In the most recent survey, no one had OS/400 V5R4 or older releases, and only 5 percent of those polled had IBM i 6.1 or earlier releases.
“We have a lot of Power5 and Power5+ machines,” says Robertson. “For a while, the main boards on the Power5 systems were hard to get, but they have opened back up again as IBM has gotten some of the larger customers to upgrade and now parts are plentiful again.”
Yarborough adds that in 2020, the plan was to reach out through the reseller network and do a push across the Rebel Alliance of resellers and third party maintainers to get many of these Power5 and Power5+ customers on an upgrade path. But when the coronavirus pandemic hit in March, that put the kibosh on that effort. But as we get our hands wrapped around this pandemic, the end of the year, with entry Power10 machines coming in early 2022, might be a good time to start doing the field work for an upgrade push about this time next year. That’s our guess. Then again, there is always no time like the present.
I have always wanted to know if OS/400 and IBM i shops just say to heck with it and self maintain. With parts plentiful and cheap, why not. This doesn’t really happen much.
“I think most people want to have maintenance on their system,” Robertson tells The Four Hundred. “I don’t see many people that go without maintenance. There are some IBM i shops that are willing to pay Big Blue because it is IBM support, and in the 1990s and 2000s, that was a very big deal. But nowadays, I don’t think it is as much.”
When I suggested that IBM itself might only be capturing 20 percent of the base for its maintenance services and the rest was being picked up by third parties, neither Yarborough nor Robertson said this was crazy. They did think that it was a rare company that flew without maintenance or self-maintained by hoarding parts. Not for production machines, at least.