PCs v. AS/400s ?

[jgm@xxxxxxx]

Jesse McKay wrote:

Our midrange products were great in the early eighties, but they didn't
change much in power or value.  The midrange marketplace was
monopolistic.  With the 1988 AS/400 announcement, midrange computers
began a fundamental change that allowed this industry to survive.

Dean Asmussen replied:

>I disagree here.  Other than switching to UNIX, HP and DEC midranges have
>done quite well, thank you, with little architectural enhancement.

Jesse replies:

Dean, you obviously have experience with non-IBM hardware, and I don't,
so I appreciate your comments on non-IBM hardware.  Almost all of my
customers dropped their Burroughs, NCR, and Data General hardware for
the S/36 just before I appeared on their doorsteps.

Your comments help me understand more about the entire midrange market,
not just the IBM sector.  I believe that the "PC threat" is aimed at
the entire midrange market, not just the IBM midrange.


Concerning monopolies in the Eighties, Dean replied:

>The midrange market in the '80s WAS NOT monopolistic.  We had the S/36,
>VAX, HP, Wang VS, NEC, Qantel, Basic 4, Honeywell, TI, and Fujitsu
>-- among others. If anything, the midrange market is more monopolized NOW
>than then.

Jesse replies:

My observation here is only to state that, prior to 1985, there were not
many vendor choices for the IBM midrange owner who wanted monitors,
printers, memory cards, or disk drives for his machine.  After 1985, the
prices for peripheral devices declined.  Today, there are many good
alternatives to IBM brand peripherals, and consumers are wise to take
advantage of them.  None of my new customers, and all of my old customers
have ten thousand dollar printers and $1500 monitors.

The entire midrange market (including IBM and non-IBM products) was
really an oligopoly, not a monopoly.  There were only a few sellers.
As a result, prices and profits should have stayed high.  But there's
a problem, a "capital-P" Problem, in that PCs became powerful enough
to perform business functions.  In the mind of many consumers, the PC
networks became able to assume the duties held by midrange computers.
In economics, this is called a substitute good, and therefore what was
an oligopoly has edged closer and closer to a competitive market, where
prices and profits are controlled by the buyers, not the sellers.

It's too bad that some of the sellers you mentioned went bankrupt or
abandoned their midrange systems.  IBM brass believed that could never
happen to IBM, no matter what IBM did.  That kind of thinking is fatal.

I think that IBM's effort with the AS/400 (combining SSP and CPF into
one platform) was fundamental.  I certainly believe that OS/400 receives
more attention with 500,000 systems than CPF did with 20,000.  CPF was
technically far superior to SSP and deserved to be the standardbearer
for OS/400.  Also, IBM now announces new midrange hardware lines more
frequently... practically every year.


>Unfortunately, enhancements don't sell new systems -- bells and whistles
>do.  In five years of dealing with BPCS and its associated AS/Set CASE
>tool, the only enhancements made have involved things that would either
>drive overseas sales or placate the Pharmaceutical User Group.  Nothing
>to help the people that already had the package...

Jesse replies:

I believe that AS/400 directions (consolidating S/36 and S/38 into AS/400,
improving OS/400, and improving price/performance with new models every 12
to 18 months for the past 9 years) have allowed IBM to lead the midrange
computer industry back to long-term health.  For years, IBM had the
reputation of being the company that thought it could do no wrong.  I
think that IBM should continue to use PC connectivity to help its business
customers get the best of both worlds.  If other vendors have already
made their systems PC-compatible and IBM is the only holdout, perhaps
IBM should do more.

As to outdated application software, I certainly suspect you are correct.
When I see "legacy applications", not only are they old, but they don't
contain considerable talent and function.  I'm always left wondering why
the customer ever thought it was good enough.

On the PC side, I have been saying for years that commercial products
are more graphical but they are not significantly more functional this
year than five years ago.  Perhaps I'm off base.


Jesse McKay
"S/36 And Beyond!"
jgm@nak.com
   N.A.K.Software, Home of "The Squirrel's Nest
Enjoy Chat with Weblines, Cybernet, Telecafe, & IRC
  199.190.119.2 * http://nak.com * 1-815-795-4894

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