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News: 07/19/2019 Owing to significant changes in the IBM Mid-Range marketplace over the past few years, we are announcing some important changes to RISC Analysis.
  • Revised Desktop License Fees.
  • Base Membership fees have been reduced to better reflect the realities of IBM's loss of market share.
  • RISC DataBox (the Online version) is now available as a stand-alone product.
  • A desktop license is no longer required for each RISC DataBox account.
  • RISC DataBox now has a Public Access Mode.
  • Non subscribers can now access our Model and Feature Code descriptions and MT-MD to FC Lists without needing Log-In credentials.
  • Discrete Affiliate Advertizing for RISC DataBox in Public Access Mode.
  • Available in late summer, 2019
Comment: As many IBM BPs, Independent Resellers, and Third Party Maintainers are aware, the IBM Mid-Range market is not what it once was. The reasons are many, including increased use of cloud services, more powerful X86 servers replacing 'Mid-Range', OEM/ODM competition, and to some extent, IBM's own actions. We have also seen a sharp decline in the number of independent resellers and Third Party Maintainers (TPMs) who specialize in the IBM Power platform. Despite the changing market, we believe it may be premature for resellers and TPMs to give up on IBM Power Systems, including AIX and IBM i.
IBM rolled out Power9 at the very end of 2017 (with the Linux based AC922). Mainstream servers followed a few months later. For IBM, Power9 has been well received and server sales have seen growth compared to Power8. Although IBM suggested Power8 as a valid alternative to intel x86 based servers, it seems they are a little more serious about it with Power9, especially for Linux optimized workloads. Add to this Google's embracing of P9 for google-Zaius, and IBM's acquisition of Red-Hat, the Power market appears to be improving. IBM have also lowered many system and component prices across the board and reduced some maintenance charges. In part, this was to increase price/performance ratios compared with x86 systems and other competing OEMs. Obviously, this also puts pressure on the reseller and TPM markets (whom IBM believe to be significant competition). IBM themselves expect the long term future for Power Systems to be Linux based, rather than AIX or IBM i. Although they have no plans to discontinue these two Operating Systems, they do not expect to see much growth.
So, why stay in the business of IBM Mid-Range? To begin with, this is still a specialized industry. Unlike the broader general computer market, resellers and TPMs with expert knowledge of these platforms have always been limited in number. As the market contracts, those who maintain a presence will likely see increased business in the long term. Many of the initial P9 systems will be coming off of IBM's standard warranty/maintenance in the next 12 months or so. Although IBM do not publish figures for extended maintenance retention, experience suggests that many end users will elect to self-maintain or seek the services of a TPM. Let us also not forget that there are still a number of IBM users running older systems - everything from p5 and i5, and above. Some of these end users of older systems have been largely abandoned by IBM but still require on-going service and support.
IBM tend to imply that resellers and TPMs operate in some kind of questionable gray domain. But, the truth is that many have been around for years. Most are incredibly professional, have state of the art facilities, and employ highly experienced tech support. The industry also has professional associations which help to define ethical standards. Far from considering the secondary market as a thorn in their side, IBM should recognize that a healthy reseller market is beneficial to both IBM and IBM's customers. Here's why.
Asset Liquidation and Residual Values. Many professional resellers will buy equipment from end-users (anything from surplus hardware components to entire computer rooms). Professional resellers do not just throw these items in a bin for later resale. Every reseller that we deal with conducts a professional audit and tests everything. They have to because they offer warranties - and they stand by them. Although, IBM offer a trade-in scheme for customers looking to upgrade, the simple fact is that values offered by a thriving independent reseller market are always going to be higher than an OEM trade in allowance. For customers looking to upgrade, this provides additional revenue for new hardware. Consequently, this is both a benefit to IBM and the customer. For customers just looking to liquidate assets, IBM should recognize that it is prudent for customers consider future residual values prior to any hardware investment. If IBM are really saying that the secondary market should not exist, they are essentially saying to their customers that there is zero residual value in IBM equipment. I believe many end-users would find this unacceptable.
Self Maintainers and TPMs After IBM's standard maintenance period has expired, customers have a choice of picking up IBM's extended maintenance, or using a TPM, or self maintaining. Whether an IBM customer chooses to self maintain or use a TPM, they are still IBM customers - something which IBM tends to overlook. There are many reasons a customer may choose to self maintain. They may have in-house technicians, an established relationship with a reseller, or prefer to not be tied to a long term contract (some TPMs offer ad-hoc services such as hardware install). For self-maintainers, a thriving and reliable secondary market is essential. In this regard, both the reseller and the customer are still supporting the IBM brand and the reseller is still facilitating the sale of IBM product (whether new or used). (yes, many resellers offer new 'unopened box' hardware). In terms of questioning the reliability of used equipment, one should bear in mind that even when purchasing maintenance parts as FRUs from IBM's Maintenance Services Division, they come with the advisory 'parts may be new or re-certified used'.
The IBM Brand IBM were one of the original iconic brands, along with Coca-Cola, 3M, Pan-Am, etc. These companies defined the notion of 'Brand Awareness' - which means that even if you have never owned or used the product, you know what it is and what it stands for. For IBM this was reliability, technical expertise, and solid customer support. This in turn led to brand loyalty, with customers proud to own or use the brand, often strongly defending it. These days, IBM seem to think that brand loyalty is only if a customer is using IBM Maintenance. Compare this to say, Ferrari. This iconic marque derives benefit not just from owners of new cars (servicing them at official dealerships) but also from brand loyalty among associations and owners clubs - which are mostly populated with owners of used cars - either self maintaining or using specialist secondary market sources who are equally proud of the brand. For Ferrari, 'Brand Presence' has its own intrinsic value - which is why the owners of used cars and the car clubs are embraced by Ferrari, regardless of where they get their cars serviced or where they buy branded parts. As this applies to the IBM Power Systems reseller market, some vendors are specialists and work only with Power Systems. Others cater to multiple OEMs but employ platform specific people. They are proud to support the platform and the brand, and they have in interest in seeing both IBM and the Power Systems brand be successful. As such, they are stakeholders in IBM's future.
IBM's Stakeholders IBM, like almost all tech firms, do not seem to grasp the notion of exactly who a stakeholder is. Stakeholders are not just the shareholders. Stakeholders are those with a vested interest in the continued success of the entity, and those who are directly impacted by management decisions. This includes employees, it includes customers using the brand - regardless of the age of the product or maintenance status. It includes those who support the brand and those who rely upon the continued success of the brand or product. A long time ago, IBM's customer retention and employee retention levels were second to none. This in turn translated into customer and employee loyalty. In other words, long before we had to define 'stakeholder', it was encapsulated in the general notion of being a decent company. Customers and employees tend to respond positively to this notion. Back then, a customer was not defined by their current maintenance contract. If they owned the product, they were considered customers.
Future Considerations If IBM are serious about positioning the Power platform as an alternative to x86 systems in the web server and enterprise server markets, they really need to start putting more emphasis on rebuilding the brand as it once was. That means respecting customers and listening to their needs and wants. It also requires re-motivating employees - morale at IBM is reportedly not very high. It also means common sense decisions that don't marginalize customers or their investments in IBM. As a case in point, when IBM sold off BladeCenter to Lenovo, they took down all of the IBM salesmanual pages for any non Power Systems Blades (something they had never done before). Consequently, a customer looking for compatible FCs for a specific blade was just met with a no results page. We pointed out to IBM that this would likely piss off a lot of IBM customers if they just needed reference info, but we were told to mind our own business. IBM simply couldn't care about the negative impact on customers. We have many more examples.
So where does this leave us all with IBM? Personally, I still think IBM is a good company with excellent technicians and innovative people. IBM's commitment to R&D and future development is unquestioned. What I do question is the competence of IBM's senior management, not only for their lack of customer consideration, but also for their lack of understanding of exactly what IBM represents historically as a brand. Many, many years ago, I came across a poster. It said: "Customers are not an interruption to our work. They are the reason for our work." If IBM are serious about a resurgence, they could do a lot worse than to bear that in mind.
The comments expressed here are the personal opinions of Gary Rockley. Gary has been involved with IBM's Mid-Range platforms for over 27 years. Comments and feedback are welcome. use info@ to send an email.