Re: The Perpetual Myth of iSeries Obsolescence

["Peter Dow (ML)" <maillist@xxxxxxxxxxxxxxx>]

Hi Scott,

A friend and I have this discussion over and over because I keep 
thinking price ought to have some relationship to cost.  To keep selling 
an item, a manufacturer obviously has to sell it at cost +, but if they 
quit making it, the price can go well below cost.  And if demand is 
high, price can go waaaay over cost.

In the case of p5 vs i5, I think it's probably more competition than 
captive market.  My understanding is that AIX is a flavor of Unix, and 
how many manufacturers make boxes that can run Unix?  And how many 
manufacturers make boxes that can run OS/400?  With no competitors, IBM 
can sell it for whatever price they can get customers to agree to; and 
customers agree to it because they like OS/400 and the hardware it runs 
on.  If the price gets too high, they can always move to another system, 
which I guess is what keeps it from being a monopoly.

*Peter Dow* /
Dow Software Services, Inc.
909 793-9050
pdow@xxxxxxxxxxxxxxx <mailto:pdow@xxxxxxxxxxxxxxx> /

Ingvaldson, Scott wrote:
> No bother Steve, this is a good subject for a Friday afternoon.  
>
> Pricing IS market driven.  Frank Soltis said once that a processor costs
> $10 billion to build; the second processor costs $5.  So take $10B +
> $5(N) divided by the total (N) of processors sold to get the cost per
> processor.  Add to that support and development costs.  Does an iSeries
> customer call in twice a month and a pSeries customer call in twice a
> year?  I don't know the answer to that, but I do know that when I worked
> in the support center we would occasionally even get Microsoft questions
> because the customers knew that they couldn't get an answer from
> Microsoft!
>
> Then there are market forces.  Why did the price of the gas already in
> the tank at the gas station go up last week?  That gas was already
> produced and it's cost basis did not go up.
>
> The pSeries market is much more competitive, the iSeries market is
> (historically) more of a captive market.  In the long run, if too many
> ISV's decide that we're too much of a niche that will likely be the
> beginning of the end.  On the other hand, if we can run every
> application natively we could end up taking over the world.
>
> I've always thought that the interactive tax hurt the AS/400's market
> share, but that was demand driven also.  Many users with small
> interactive needs did not want to pay for full interactive capacities.
> So users with huge interactive needs paid dearly (captive market) and
> some eventually migrated to "cheaper" platforms.
>
> Regards,
>  
> Scott Ingvaldson
> iSeries System Administrator
> GuideOne Insurance Group
>
>
> -----Original Message-----
> date: Fri, 28 Apr 2006 14:46:48 -0400
> from: "Richter,Steve" <Steve.Richter@xxxxxxxxxxxxxxx>
> subject: RE: The Perpetual Myth of iSeries Obsolescence
>
> Scott,
>
> not to be a bother, but IBM made the decision just 2 yrs ago to slash
> the price of the p5 and keep the i5 where it was.  A dual core p5 is
> sold by IBM for $4000. AIX is $1500.  IBM software support is another
> $1500. DB2 for the dual core p5 is $4600 per core or approx $130 per
> user.
>
> -Steve
>
>