IBM and Compaq are all set to enter the ring for the Lonsdale Belt of the IT market ? the controlling share of the PC server business. In the first quarter of next year, IBM will announce that Windows NT will run on the AS/400, a move designed to further strengthen its position in the server market.
IBM is attempting to win customers away from PC-based servers and persuade them to use its AS/400 mid-range system via a third-party software product. For its part, Compaq is attempting to persuade IBM AS/400 independent software vendors to switch their allegiance to Compaq. IBM?s riposte is to target Compaq?s high-end resellers in an effort to win them over to the AS/400 camp.
Earlier this year, Compaq announced that it is to woo the AS/400 resellers in a bid to provide an alternative to IBM?s flagship mid-range server. Compaq has been aware for some time that many of its resellers do not have the necessary knowledge to support the enterprise systems market, despite the fact that it has server products capable of rivalling the mid-range system.
IBM has been forced to acknowledge that Compaq and other PC manufacturers have been eyeing the AS/400 market greedily. With its takeover of Tandem, Compaq now has a range of machines which take it into the mainframe enterprise systems world. Although it may be difficult to create a synergy between the two technologies, Tandem and Compaq have been active in heavy development work around Microsoft NT. The AS/400 will be one of the first machines which the merged company will target.
Paradoxically, while Compaq feels that some of its resellers are not capable of handling data centre type servers, IBM clearly believes they are, and is actively recruiting in the Compaq channel. IBM makes no bones about its intentions.
?It is a one-on-one fight and I love a battle,? says Emma Hughes, marketing manager of the AS/400 division. ?We are trying to recruit resellers from the channel, particularly from Compaq,? she adds.
According to Hughes, profit margins on some AS/400 boxes are better than on PC-based servers, while the machines themselves are slightly cheaper. ?A reseller can make #1,000 profit on a #9,000 AS/400, and as we know profit margins on PC servers have been falling,? she says. ?We will be announcing NT for the AS/400 in the first quarter of next year.?
In July, IBM announced the availability of ACS400, a tool that enables users to migrate their PC server-based databases on to the AS/400 Advanced Series. ACS400 was developed by US software house Acsis Technologies, an IBM development partner specialising in client/server development tools.
According to IBM, ACS400 will allow the migration of application databases created using Clipper, Visual Basic and Btrieve to either IBM?s DB2/ 400 or to the machine?s internal database. The role of Acsis in the process is to work with PC developers, provide a front end to an AS/400 application and map the AS/400 database or DB/2 database on to the PC application. Because ACS400 has direct access to the AS/400, there is no need to go through the SQL process.
IBM?s aim is to promote the AS/400 as the PC server, while Compaq?s is to eat into the server space occupied by the AS/ 400 installed base. Compaq has targeted the market well. The AS/400 is one of IBM?s most popular machines. In 1994, six years after it was launched, IBM delivered its 250,000th machine, and there are now, according to IBM, 425,000 machines installed worldwide.
The IBM case for moving to an AS/400-based server, as opposed to a high-end PC machine, centres on database technology. In summary, IBM argues that application designers have two key concerns when developing software: database integrity and performance. As the size and scope of applications designed to run on desktop servers increases, so the size of the database and demand for multiple user access increases. Even the most robust PC-based database is incapable of matching the features offered by the AS/400 especially now that DB2/400 is available on the AS/400 Advanced Entry, IBM?s entry-level system.
The concept of using the AS/400 like this is not new. As far back as 1991, US analyst ADM Consultants foreshadowed today?s debate in a report entitled The AS/400 Revolution.
?There is a school of thought that believes the PC Lan systems (with or without Unix) will take over the world of computing. True believers see the power of the microprocessor leading to the demise of both mid-range and mainframe systems. This interesting concept does not hold up under analysis,? the report says.
ADM acknowledges that microprocessors offered tremendous price performance in terms of raw processing power, and that ?they will become the raw mechanism driving that power?. But, the report points out, ?there is more to computing than simply providing processor power?.
The report describes the features required by a file server: a good multi-user operating system, an efficient database management system, highly reliable disk drives, sophisticated security system, peer-to-peer communications, and advanced communications and network capabilities.
?The description of an ideal file server fits the AS/400 very well. As the entry-level price of the AS/400 drops and connectivity options broaden, it will become more widely used as the control point for networks of intelligent workstations. This is no coincidence since the AS/ 400 designers planned it that way,? the report concludes.
It seems to have taken IBM six years to reach the same conclusion. According to Stephen Selley, VP of technology at Acsis, IBM?s strategy has been in place for at least three years, during which time it has been assembling the necessary hardware and software components.
Selley, echoing the ADM findings, believes the design of the AS/400 offers significant advantages over PC-based server systems. ?The main advantage that we have is that the AS/400 is a fully integrated machine with the database as a part of the operating system.
?You don?t have to build anything on top of that as the PC firms do. Because the AS/400 is a transaction processing-based machine with a multi-processing design, I/O loading is not going to affect the performance of the database.?
He also points out that the system has other advantages in the server world, such as disk and processor mirroring.
Selley admits that it will still be a battle to bring PC resellers into the AS/400 camp because of perceptions that the machine is a proprietary OS-based minicomputer, and that it is not user friendly. ?People still think of it as a System 36 or System 38 [the two IBM minicomputers which the AS/400 replaced]. But we are working with PC software developers that have never seen an AS/400, and once they get their hands on it they love it,? he says.
Northamber, IBM?s only AS/ 400 distributor in the UK, admits that attracting Compaq resellers to AS/400 is not going to be easy. ?The trouble with the AS/400 people is that they do not know about PCs,? says Steve Stokes, AS/400 and network systems product manager at Northamber.
The same argument, Stokes acknowledges, applies to PC dealers when faced with the challenge of selling the AS/ 400. ?They regard it as a black box,? he says. But he argues that although PC dealers will have to spend some time and money on AS/400 training, the effort could be well worth it. ?For PC people who come up against the AS/ 400 and lose, the investment could be worthwhile,? he says.
But the battle for PC dealers? hearts and minds will not be easy. ?Nobody is going to beat a path to IBM?s door,? says Stokes. He adds that it is an ?open secret? that IBM is about to announce NT on the AS/400.
According to John Sniadowsky, a consultant at Bloor Research, IBM?s decision to put NT on the AS/400 is a good move. ?It makes a great deal of sense. If you wanted to position yourself against Microsoft you can say we have this wonderful piece of hardware with all the bells and whistles that will run NT,? he says.
But he believes the news will be less than welcome to some other suppliers that have committed themselves to Intel and NT, such as Digital and HP.
Compaq?s initial reaction to the news that IBM is to run NT on the AS/400 was one of incredulity. ?I?ll believe it when I see it,? says Hugh Jenkins, enterprise systems marketing manager at Compaq.
Jenkins points to the fact that the AS/400 has traditionally been a proprietary system and that NT will open up the environment. ?Paradoxically, the strength of the AS/400 has been its closed architecture. What we have seen happening in the past couple of years is a lot of AS/400 developers porting to NT because the AS/400 market is too narrow.?
He adds that he expects opposition from IBM?s AS/400 division because of its success in selling into the server market. ?Compaq has now come within the AS/400 division?s sights,? he says.
Jenkins is certain the firm can beat off the challenge from its rival. ?They have to do what Compaq does and do it better,? he says. But he concedes that the AS/400 is a contender to be reckoned with. ?We take the AS/400 extremely seriously. In its old incarnation it was a role model for us.?
There is little doubt that the AS/400 represents a serious threat to Compaq?s server business. The machine is highly scalable, has its own database and 28,000 applications, and is generally considered to be one of IBM?s great successes.
Compaq has always suffered from a major drawback, which it may now be on the way to correcting ? above the desktop it had nothing to offer. Now that it has taken over Tandem, the vendor is in a position to offer full scalability from the desktop to enterprise systems.
The server market is the key to enterprise solutions, and every major company is targeting it. As Compaq and AS/400 resellers battle it out they will not be alone in the ring. Other companies like Digital and HP also recognise that their future depends on being able to win a share of the market.
The AS/400 has a proprietary operating system in OS/400, which is extremely popular. The problem is that only the aficionados among the AS/400 resellers understand it. By offering NT, with which most resellers are acquainted, IBM could well pull in resellers that would previously not have considered taking on the machine.
Many observers believe NT is still not scalable or stable enough as an enterprise solution, but many purchasers, influenced by Microsoft?s continual barrage of propaganda, are still attracted to the operating system. By offering NT as an alternative to OS/400, IBM stands a fair chance of attracting these customers. There is a suspicion in the mind of some observers that IBM has made its move into the NT camp less because it expects customers to use the operating system ? put simply, if you do not have NT you are not invited to the party.
As Compaq and IBM offer inducements to each other?s resellers to switch camps, the real winners will be those dealers that take the plunge.
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