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Redmond vs. Big Blue: An eye for an "i"

Ninety days after launching the iSeries Initiative for Innovation, IBM says the program has been a huge hit. But Microsoft says Big Blue's latest success does not have any bearing on its midrange mindset

Three months ago, IBM announced the launch of the iSeries Initiative for Innovation, its most aggressive plan for strengthening its relationship with independent software vendors (ISVs) in the midrange space in years.

The $125 million investment had a clear objective -- to help break Microsoft's chokehold on the midrange server market. Ninety days later, IBM brought home its first report card, and while it's still too early to say whether the program has long-term legs, Big Blue is sticking this one on the fridge.

IBM recently announced that it added 180 new applications and 78 tools partners -- providing 156 tools -- through the Initiative for Innovation in the past three months, roughly halfway to its new applications goal for 2005.

According to Gordon Haff, a senior analyst with Nashua, N.H.-based Illuminata Inc., the simple fact that Big Blue is touting these numbers means that, at least internally, IBM is very happy with the Initiative for Innovation's early progress.

If it wasn't, Haff said, you probably wouldn't hear a peep from Big Blue.

"It's always hard to say what this means, but the fact that IBM is making this kind of information public and is touting it, it's fair to say IBM thinks things are going pretty well," Haff said. "Keeping it in the spotlight and releasing a fairly quantitative report card means they're pretty comfortable with people looking at the numbers."

The Initiative for Innovation has taken a three-pronged approach since its launch in March. There is the Application Innovation Program, which provides up to $50,000 in enablement support services for ISVs, such as free support in architecture, education and conversions. There is also the Tools Innovation Program, a portfolio of tools designed to enable partners to enhance their current applications.

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IBM has also instituted an advisory council, made up of 25 of its stronger ISVs, to help influence the long-term strategy of the products being developed under the Initiative for Innovation umbrella. The council met with the folks in the Rochester development lab for two days last month, and Big Blue plans to hold five to six phone conferences a year with the council.

What it all boils down to is a serious attempt by IBM to provide some TLC for its ISVs.

"What this whole thing is about is spending more time and more development [assistance] with ISVs and tool developers, said iSeries tools executive John Quarantello. "They're getting a lot more attention than they ever had in the past … [and] if they're more successful, then the iSeries is more successful."

Microsoft has a similar program, dubbed the Midrange Alliance Program (MAP), and IBM has taken great pride in pointing out that it already has more than twice as many tools partners as Redmond, which currently supports 35 tools partners. But Microsoft platform strategies group manager Tim O'Brien said that figure is misleading because Microsoft's strategy is to be very picky in regards to whom it partners with. The way Redmond sees it, 80% of the value in the market is delivered by 20% of the partners, and it wants to focus on the partners that have the most juice on the midrange space.

And O'Brien insists that IBM's recent success with its Initiative for Innovation has absolutely no impact on Microsoft's plans for the MAP.

"Our strategy behind the MAP is about depth … IBM's strategy is to get as many partners as possible -- and we're about getting the right partners," O'Brien said. "There's a set of partners in the 400 community that have a great deal of equity and credibility in the community. We were very selective about the partners we want to work with … [and] these partners took a leadership role in the market segment."

The battle for the sweet spot in the midrange market isn't limited to IBM and Microsoft, of course, with Sun Microsystems Inc.'s decision to open source Solaris a prime example, and it isn't going to quiet down any time soon.

Eventually, according to Haff, the well is going to dry up because there are only so many iSeries ISVs to work with. But until that day comes, IBM and Microsoft will continue to jockey for position atop the midrange server race.

"The challenge [IBM] has is that there's a lot of companies trying to cultivate relationships with developers … but there's only so much mind-share and total developer time out there to develop a relationship to cultivate."

Let us know what you think about the story; e-mail: Luke Meredith, News Writer

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