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Blame it on inertia: Why IBM can't market the AS/400 with gusto

Blame it on inertia: Why IBM can't market the AS/400 with gusto

Sure it's an old story, but IBM Corp.'s lack of commitment to the AS/400 continues to be a sore spot for users. Despite IBM's attempt to ward off such sentiment during last month's Spring COMMON User conference in San Diego, frustration continues to mount as AS/400 loyalists fear their beloved server will get squeezed out of the market by products marketed by the likes of Microsoft Corp. and Sun Microsystems, Inc. discussed IBM's commitment to the AS/400 with two veteran AS/400 professionals. Burke Allen is president and CEO of NovoLogic, Inc. in Lawrenceville, Ga., an IBM and Lotus Business Partner that focuses on e-business integration services centered on the AS/400 platform. Steve Croy is manager of technology at Seta Corp., a jewelry catalog company based in Boca Raton, Fla. Both professionals agree IBM's lack of interest in the AS/400 could ruin the server but says Big Blue just can't manage to get out of its own way and do the right thing.

SEARCH400.COM: Are you satisfied with IBM's support of the AS/400-technical, marketing or otherwise?

ALLEN: Technical support has always been good. Marketing support has always been horrible. Although it's getting better, it's still not even adequate. I don't know, perhaps they're [IBM] holding off to see what they're going to do with their server strategy. Whatever the reason, they don't like to brag about it [AS/400]. That's the frustrating part.

CROY:They have technical support. It's a solid platform that doesn't create technical issues. As long as I can remember, IBM has had marketing support for the AS/400 in the South Florida area [where I live]. They closed every store in the area and now the only place to get marketing support is in Orlando, which is about 400 miles away. That's the commitment to AS/400 marketing?

SEARCH400.COM:It's such an old story, though, users whining about IBM not paying attention to them. It's a good solid machine, why can't it sell itself?

ALLEN:History has dictated that is has taken care of itself. The danger is in always assuming that you don't need to market your product because it's so good. Other companies understand that there are new generations of people who don't know about their products. So, they continue to market with a vengeance. That's the fear with the 400. All of us grew up with and love the 400 and are faithful to that brand. There are people coming out of college who don't know about it. They're getting bombarded from other companies about their products and unless they're made aware of this [AS/400] product as well, it doesn't make any difference how good it is.

CROY: I think Burke nailed it. Why should the United States Post Office advertise? They're a protected monopoly. But, they still advertise their services with gusto. Why would they do that? IBM has good products and services and one of the most sophisticated operating systems in the industry, why wouldn't you want to advertise it? It makes no sense not to advertise it. At a recent user group here in South Florida. I made the observation that there was no one under the age of 35 in the room. Where's your new talent? Where do you go looking for that talent if it's not going to be produced in college? Once again it makes no sense to have a product out there that's the greatest thing since sliced bread if no one knows about. Who does it serve to keep the general public in the dark?

SEARCH400.COM: Does IBM's lack of support go across the board - marketing, online support, technical support - or are some areas better than others?

CROY: It's not across the board. IBM is seeking a new focus for their box. That's why they're focusing on the server as an e-business tool. In the meantime, they're disregarding the captive market they already have--people who have a lot of money and time invested in applications and applications development that can ill afford to hop to a new platform. Those people are being given short shift. IBM desperately seeks to crack the server market where they would like to be the major player. But the AS/400 is not a 24x7 box and it seems to me that they're pursuing a market they really can't service at this point in time. If they are successful in grabbing that marketplace [e-business], what little support we have on the traditional AS/400 is going to completely evaporate. At another recent user meeting we were told that IBM isn't spending development money on RPG. They're spending their money in the Toronto lab on Java. This is good for new clients, but it doesn't do a damn bit of good for existing COBALT or RPG shops. I think that lack of support is a marketing decision, not a technical one.

ALLEN: I think that's the biggest problem and not an easy one to solve. Instead of letting them compete vigorously even among themselves and find out what platform is the best platform, they're preventing it. It's been a conscience decision [on the part of IBM] to not market the AS/400 as heavily as they could be because it's one of the better technologies--for fear of alienating the other server groups.

SEARCH400.COM: It's obvious that the Magic Box campaign was a failure. Was it a good idea but bad timing? Was it a good idea but implemented poorly? Or, was it just a really bad idea?

ALLEN: Part of it was a good idea. Part of it was just building brand awareness in an attempt to expand all their server lines. The problem is they didn't follow that up with targeted marketing campaigns for each of the specific platforms. Open up any magazine not published by IBM and how many ads do you see for AS/400? Most of the time, you're lucky if you find a single ad.

SEARCH400.COM: But, you do see ads for other IBM products?

ALLEN: Yes you do. But, to me, if I were heading my business on an RS6000, I'd still be upset with IBM because they don't even advertise the RS6000 as much as they should. It's just that the AS/400 is proportionately low even compared to the rest of their product line.

CROY: I think it was a relatively poor effort as an advertising campaign. Burke mentioned branding and that's a good aspect. But, to reach your customer base you've got to give them a place to follow up. In this campaign, they showed no 800 number, no Web site to visit or anything like that. They didn't splash that on the image. It was nowhere to be found. So, you presented me an intriguing ad, where do I go for more information? That seems to me like a glaring omission for an ad campaign.

SEARCH400.COM:Do you think the lack of contact information is deliberate or was it just stupid? Well, maybe not stupid, but perhaps, shortsighted?

CROY: I like your word.

SEARCH400: Stupid?

CROY: If the shoe fits.

SEARCH400.COM: I guess it goes without saying, then, you don't consider their sales efforts aggressive enough?

CROY: What sales efforts?

ALLEN: I would agree with Steve. What sales efforts?

CROY: They don't really sell. They have to depend on VARs. VARs do a better job than IBM.

ALLEN: And, even most of the VARs are just astute order takers. They're just working the existing customer base.

CROY: Exactly.

ALLEN: And, that's because it's hard to get into a customer who isn't using the AS/400 because they don't know about it. It's a completely foreign thing to them. Every time you open up an Information Week, there's not a story about the 400. It's about an NT box or a mainframe. There's always something about Bill Gates talking about doing this thing or that. You don't see too many things about Lou Gertsner doing some leading edge thing--good or bad.

CROY: Not too long ago, IBM announced a 5GHz chip. If that were Intel, that chip would be on the market next week. What's IBM going to do with it? That's the difference between companies like Intel and companies like IBM. Intel is in competition to see who can get into the market first. If they develop a product, they're not going to sit on that product. In the last year, IBM led all companies in patents. So, this is a company that has tremendous R&D potential, and they're losing shares in the marketplace to Intel and Sun. Why? They have the cash advantage. They have the technological advantage. They have the talent advantage. Why aren't they innovators?

ALLEN: In the early 80's IBM was known as the sales and marketing company. Everyone looked to them to learn how to structure their sales efforts. They were not known as a technical company. Now, they're known as a technical company. Now, no one wants to do marketing like them. That's where they've gotten off course. Sure, their products are outstanding, but they don't tell anybody about it and make it hard to find out about it.

CROY: You want marketing? Windows 2000 was announced with about 60,000 bugs. Microsoft said, 'only some of them are fatal.' People are lining up to get it. If that's not marketing, I don't know what is.

ALLEN: That's what frustrating. We know the products are better.

CROY: When was the last time you had an AS/400 crash?

ALLEN: We know the products are better, it just without that constant reminder from IBM about that, it's our word against Bill Gates. And, who are we to convince this new customer we know what we're talking about?

SEARCH400.COM: We touched upon it earlier, but what about IBM's attempts to push the AS/400 as an e-business tool? What about Websphere? Is it going to save the AS/400 or hurt it?

ALLEN: The strength of the 400 has always been that history hasn't been forgotten. They've always kept the older technology even as other stuff comes out. They always improved it. But in recent years, they haven't updated the old with the new. I'd hate to see that happen. Novologic's business is to focus on the new stuff. We're trying to ride that wave of the e-business platform. Well, they may say they're pushing it, but get a magazine and show me the proof. I don't see any ads about Domino and the 400 being the place to run your e-business applications. I see a lot of ads for Windows. I'm not bombarded with ads about Domino.

CROY: Perception in the marketplace is that the AS/400 is old technology. Even though the machine underlying the code is completely different than it was in 1988. With everyone serving up GUI images how can it compete? You've got two sales people-one showing graphics the other is showing green screen. It looks dated. If you're focusing on Java, you need a visual presentation. They want to make it a service machine. They're competing with 24x7. IBM wants to make it compete, but they are not committed to making it the open box that the Unix world acknowledges.

SEARCH400.COM: IBM's chairman and CEO Lou Gertsner had mentioned in an interview recently that he would not rule out spin-offs of the company. There was also some talk at COMMON about Dell Computer Corp. being interested in the AS/400. Would the AS/400 be better or worse off if it were spun off as a different company from IBM?

ALLEN: That's a dangerous one to try to answer. Having made trips to Rochester where the 400 is made and talking with people that are back in the technology side of that group, I know they are all as exasperated as we are about the lack of marketing of their product and the restrictions on what they can and cannot do. They have one of the better R&D labs in the world. But, they constantly have to wait to bring it out, let another server line catch up or don't do it at all because it will impact the mainframe group. I think if it were allowed to work more autonomously whether inside or outside of IBM, it would be better off.

CROY: I don't think that's going to happen. I don't know what their problem is but they don't seem to be able to commit to let the AS/400 live up to its potential. It's IBM internal politics that prevent the AS/400 from dominating certain parts of the market.

ALLEN: What the guys at the top [of IBM] need to understand is that customers are not loyal to IBM, but loyal to 400. Thinking that these customers are loyal to IBM is a mistake. They need to try to overcome that. I think if they let the AS/400 live up to its potential like Steve said, they'd get more customers who were loyal to IBM in the long run.

SEARCH400.COM: You don't think they'll ever give up the AS/400?

CORY: I don't see how they could afford to give it up. There was a time when there was an adage that 'nobody ever got fired for buying IBM.' But that is no longer true. IBM better wake up to the fact that management is not interested in the technology. Management is interested in solutions. I want an e-commerce site out there. I'm not interested in the technology. I want to generate revenue. Give me a solution. If I have a deadline to meet and I have a site to put up to the public, I'm not interested in who the provider is, but whether it works or not. Give me a solution. The brand loyalty to Big Blue is over. I need solutions, not platitudes. Where is this mindset coming from within IBM? Why is it allowed to exist?

CROY: If we knew that, we wouldn't be here talking about why it's marketing was bad.

ALLEN: Yeah, we'd be over at Gertsner's office sharing a cigar.

SEARCH400.COM: But, if everyone else thinks IBM is out of sync with the industry it serves, why can't IBM see it for itself? It almost sounds too simple. Just change. Why can't they?

ALLEN: Inertia.

CROY: Inertia is one of those properties that most people who haven't studied physics don't really appreciate. It's like the car on the train track. 'Surely the train sees me. He can stop.' Well, stopping a 60-ton train while it's going 70 miles per hour is not an easy prospect. The dot-com companies, small agile companies, can take advantage of the marketplace much easier than a company the size of IBM who has a considerable history and inertia behind it. Getting it to change direction is not a simple or easy process.

SEARCH400.COM: Some administrators say the AS/400 is a hard sell because IBM doesn't promote it to the CEO or CIO. Is this your experience? Isn't it your job to sell it to the CIO or CEO, not IBM?

ALLEN: Microsoft isn't relying on its business partners to sell the world on the fact that their operating system is better than what IBM and Sun have to offer. I'm just one individual trying to convince them that the 400 is the best technology.

CROY:Again, that AS/400 is old technology.

ALLEN: That's right. 'What is an AS/400? I saw one of those things once, it's an old mainframe, right?'

CROY: Yeah, it's down at the Smithsonian.

ALLEN: You pick up a newspaper ad and you see ads for Compaq and Windows 2000 and Gateway. It's what they're reading in trades-what they're seeing at the airport. It's real easy to walk in the door and say I've got this Microsoft stuff and it's really great. Well, they've probably heard about it 30 times even before I walked in the door. And, when I walk in and I say, I've got this thing called the AS/400. They've never heard of it, let alone seen one, despite the fact that there's more AS/400s than any other server on the planet. It's the best-kept secret.

CROY: It's a hard sell to go into the boss' office and you show him a green screen presentation and tell him it's going to be a $30,000 solution and the competitor on the block comes in with an NT box and does a nice GUI presentation and tells him it's going to cost 13 grand. Aren't we really talking about perceived value? IBM doesn't advertise it and the person isn't familiar with the product, what's the perceived value? Not much, right? Microsoft, as Burke has pointed out, is a known entity it has a perceived value. What's the perceived value of the AS/400? And, to paraphrase Burke, trying to go in and sell his product to someone who's never heard of it and tell him the AS/400 is the greatest thing since sliced bread, the guy behind the desk says 'If it's the greatest thing since sliced bread, how come I haven't heard about it?'

ALLEN: Sometimes, the only way to convince someone to use an AS/400 is to give it to him and let him use it for a while and let them see how good it is. They don't want to give it up. But, us small business owners don't want to do that that often.

SEARCH400.COM: What can IBM do to make you happy? Is there anything?

ALLEN: Market the box.

CROY: Tell everybody that major league baseball runs all its stats on a 400.

CROY: Tell them Microsoft used over 200 AS/400 to run its business for many, many years. I still think they have an enormous number. They tried for years to move off, but were never able to do it.

ALLEN: Most of the major casinos in Las Vegas run on AS/400.

CROY: Don't be afraid to use a number or an Internet address.

ALLEN: Don't just tell people at conventions. Right now, they're preaching to the choir.

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