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IBM's Jarosh sees new applications fueling AS/400 growth

When IBM reported a surprise slowdown in hardware sales late last month, Tom Jarosh was one of the guys on the hot seat. The AS/400 hit a rough patch in the latest quarter due to Year 2000-related slowdowns and price competition. As general manager of the AS/400, the task falls to Jarosh to rejuvenate sales.

But Jarosh isn't worried. He foresees a rebound in the enterprise resource planning market juicing AS/400 sales by the middle of next year. And he expects strong sales of the new Dedicated Server for Domino to further IBM's goal of generating a quarter of its AS/400 business next year from new customers.

Search400.com editor Paul Gillin recently caught up with Tom Jarosh at IBM's Somers, N.Y. offices.


IBM's JAROSH SEES NEW APPLICATIONS FUELING AS/400 GROWTH


BY PAUL GILLIN, EDITOR, SEARCH400.COM

When IBM reported a surprise slowdown in hardware sales late last month, Tom Jarosh was one of the guys on the hot seat. The AS/400 hit a rough patch in the latest quarter due to Year 2000-related slowdowns and price competition. As general manager of the AS/400, the task falls to Jarosh to rejuvenate sales.

But Jarosh isn't worried. He foresees a rebound in the enterprise resource planning market juicing AS/400 sales by the middle of next year. And he expects strong sales of the new Dedicated Server for Domino to further IBM's goal of generating a quarter of its AS/400 business next year from new customers.

Search400.com editor Paul Gillin recently caught up with Tom Jarosh at IBM's Somers, N.Y. offices.

The AS/400 community is not sure how to assess IBM's move away from product-specific advertising to the new Magic Box campaign. How does the 400 fit in Magic Box?

We're trying to get more leverage out of ad dollars by spending some of them on the Magic Box umbrella. That's designed to raise the image of IBM servers as something special. Then we drive individual brand advertising under that. We have started that with Domino on AS/400 and an ERP campaign.

We are early into this; we've just launched Magic Box outside the U.S. Early results seem to be favorable but we have no test results on the ability to leverage AS/400 advertising within that.

The AS/400 brand campaign was very well received. We're early into Magic Box in determining whether it's successful or not. If it's not successful, we'll change it. It has to raise the awareness of the 400, increase familiarity with its values and improve purchase consideration. If those don't increase, we'll switch to something else.

What are you doing to target new customers?

We segment the market into categories: core applications such banking and the financial applications that have always been the core strength of the AS/400. Then there are new applications like Web serving, Domino, collaborative computing and business intelligence.

For Web serving and data mining, we focus on the installed base. We won't sell the AS/400 as a Web server to someone who doesn't have an AS/400. It's the same for data mining. We're going after new customers in core applications and in Domino. For core applications, ERP is the heart of the business and we're now expanding into supply chain and customer relationship management (CRM). Our statistics show that in the first half of this year, we're well above 20% new customers. This is against the historical number of 12% to 15%. We're trying to get 25% of the customers who buy an AS/400 to be new customers. We think that's aggressive.

How's Dedicated Server for Domino doing against projections?

We're pleased with what it's been able to accomplish from an attention point of view. It's a Domino Release 5 machine, which means we're somewhat constrained because R5 has been slower to get into the marketplace. But as those transitions take place, we think that will help.

We promoted Domino on the AS/400 very heavily at Lotusphere in Berlin in October. We spent a lot of money on merchandising AS/400 at that event and we got a lot of attention. We plan to do the same thing at Lotusphere in January.

What role will Java will play as a core 400 technology?

A couple of years ago I said that Java is the future programming environment for the AS/400 and customers gasped. Now that's no longer the case. We aren't pulling back from RPG or Cobol, but we continue to invest very heavily in a full-function, robust, high-performance Java implementation on the AS/400. We will never let ourselves get behind in supporting a programming language like we did with C and C++. We just release JDK 1.2 on the AS/400. That was the first IBM platform to have that functionality.

How should that affect skills development plans of your customers?

In my opinion, we've reached the high point of the number of RPG skills that will be available in the marketplace. Every major university is teaching students Java. Application providers are writing extensions in Java.

Last year we wrote an offering that allows an RPG programmer to see RPG and the comparable Java in a different window and use that to get a handle on Java syntax. We're also integrating our programming environments so that RPG, Java and all the visual offerings come together as a Visual 400 offering. You'll see that integrated environment next year.

What are you doing to keep the 400 at the forefront of e-commerce standards, especially XML?

The AS/400 supported XML initially in V4R3 and in a very robust fashion in V4R4. It's one of our development priorities and we actually use it quite heavily in the development of some of our new user interfaces.

Our goal is to be right there as new Internet functionality is available in the marketplace. We had a couple of years' of catching up to do there, but now that's behind us. LDAP support, public key infrastructure, virtual private network support are all there. Now it's a matter of making sure we are never behind and I don't expect we will be, whether that's Internet 2, XML, Java or whatever.

Tom Bittman at Gartner Group recently said he thinks Y2K freezes are hitting the 400 harder than most platforms. Is there any truth to that?

When we announced third quarter earnings we were pretty candid about the fact that Y2K slowdowns were having an impact on the AS/400. Roughly 30 to 35% of our business is in ERP, and when that marketplace is down 30%, it has an impact. However, all of our data says that that (ERP) market is going to come back pretty strong next year.

Is the ability to co-mingle Windows NT and AS/400 applications on the same machine hurting your efforts to recruit major vendors to migrate applications to native AS/400 mode?

It's actually helping us. Some ISVs are starting on NT, porting part of the application to the 400, seeing what the opportunity is and then moving the rest of the application over.

What will customers see in terms of performance improvements over the next three years?

Double and double and double and double. It's faster than Moore's Law, which doubles every 18 months. Our fundamental architecture is 128 bits and we're only using 64 of them right now. We'll see continued dramatic performance increases. And the wonderful thing is that every program that someone wrote for a System/36 or System/38 15 years ago will continue to run without having to be recompiled.

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