Critics slam AS/400 service

Analysts have criticised IBM's revised software subscription service for AS/400 maintaining that it would leave large users facing six-figure bills and earn the manufacturer an extra #200 million in the process.

The flat fee subscription service was introduced in April last year, but IBM is now telling users they have 60 days to commit to the service or face increased bills for upgrades in future.

Mark Raphael, analyst at Meta Group, said: 'IBM says it won't make money from this but large AS/400 users could pay #1 million or more if they decide not to commit within 60 days. Customers will be hit by stiff price penalties if they upgrade their systems and software at a later date.'

He added that his objection was not with the subscription scheme per se, but the way in which IBM was introducing and timing it. 'IBM is failing to communicate the reasons for the change,' Raphael argued, adding that it was 'unacceptable' for IBM to try to enforce the change within 60 days.

But he believed many users will not understand the implications of the change. 'IBM is saying that when users do upgrade their systems, they could face a subscription charge and concurrency access fees amounting to between #1,500 and #80,000 per processor for a three-year subscription,' Raphael said. 'IBM is sensitive about this and argues that the subscription scheme offers better value in the long run.'

Greg Adams, US AS/400 program manager at IBM, said once users get to OS/400 V4, they have a fixed period of 30 days from installation to decide whether to join the subscription service.

'The move to a subscription service is no surprise to the market. We outlined the terms and conditions of the programme in April last year,' he added.