How do you see the recent technology changes to the iSeries affecting the platform?
In terms of technology, it's really about how we've incorporated all these new technologies, such as on-demand capabilities, into the iSeries. What it means for users is that they now have a fully enabled platform. Is this new pricing strategy also meant to target the small-to-midsized business market?
Yes. We've implemented a pricing strategy that's attractive to the midmarket. We have a very aggressive strategy that gives customers tremendous price performance. But there's also the value approach. We've packed into the Enterprise Version of the iSeries, e-business tools and other software, such as WebSphere Application Server, Lotus Sametime and QuickPlace, BRMS, and Tivoli Storage Manager; that makes the iSeries an incredible value. We also eliminated the interactive feature, which has been problematic. With the aggressive pricing on the Standard Version and the value pricing on the Enterprise Version, we think we can [effectively meet the needs of the midrange market.] What is your strategy for competing against the Windows server platform?
Our strategy is to focus on customer needs. In the midmarket, customers are getting tired of this horizontal server proliferation. They want a solution. Customers are really looking at the iSeries box as a way to integrate these server environments that were getting out of control. When they found they could leverage the iSeries, that became very appealing to them. We realize it's all about helping customers lower their TCO. IBM has also made significant announcements in terms of marketing and pricing. What kind of benefit can users expect from this shift in strategy?
It's really about simplicity. We're offering the ability to work in a multiple-[platform] environment, whether it is Linux-based or Windows-based applications, and simply making it appealing to the small-to-midsized business. The sweet pot for the iSeries is the middle-market customers. If you're looking at how we're bringing this to market, we're talking about how these changes can make management easier, which is very attractive to those markets. IBM has been criticized for touting the virtues of Linux and exploiting all the 'gains' Linux has made with the iSeries, when it appears that the percentage of iSeries shops using Linux is relatively small. IBM is very aggressive in its Linux campaign and very enthusiastic about its future, but what are your plans for getting more people to adopt it?
Those comments are interesting to me. When we first put Linux on the zSeries, we got the same kind of reaction, and look where it is now. The iSeries is at a place where the zSeries was back then. The number of customers using Linux is growing, and we're going to tout the advantage to using Linux by telling their stories. We're going to talk about how they're lowering their cost of ownership because of Linux. I do take your point, however, and say that [adoption of Linux on the iSeries] has to build on people believing that it's possible. Linux is part of my monthly focus item. Monthly focus item?
Yes. Every month I meet with the sales team and discuss the revenue that we're deriving from Linux worldwide. You're really pushing your on-demand initiative. Other companies are, too. The iSeries is really at the forefront of this. Can you explain how or whether in, say, two years, the iSeries shop will change as a result of on-demand?
The on-demand notion is a powerful notion of how business and technology will come together. Businesses need more flexibility in their business model. You need technology that supports that. On-demand technology, such as dynamic processing and virtualization, will do that. Have you seen a significant jump in sales since you've incorporated these changes?
Well, I can only address it in terms of saying we're off to a great start in the first quarter. We're confident we're going to see our objectives met, which is to grow and take market share. I think we were all expecting to see an immediate transition to on-demand computing. But it doesn't look like that's happening. In five years, will we see every iSeries shop in the midst of an on-demand computing environment?
Every new system, from the midrange to the high-end, has on-demand capabilities. The real question is how to get people to take advantage of it. It's real, and it's happening, and IBM is delivering. Earlier you mentioned the competition. This is a business transformation. Oftentimes it looks to us like our competitors are downloading stuff from our Web site and saying it's theirs. We're investing huge amounts to make this real and, to show that, IBM is achieving these benefits internally. We're proving that with grid computing, for example. We've integrated it internally and [are] using it successfully. There's been a lot of talk about the iSeries and pSeries merging. If that is to happen, what timeframe are we talking about? How does that happen?
People are afraid of change. I hear that, too. If you look at the [Hewlett-Packard] HP 3000 server -- they dead-ended it. We're not doing that. We're going to continue to support this environment that can integrate any workload. Our focus is on simplicity. The assurance is that, whether it's an AS/400 environment or an RPG environment, it's about bringing customers options. As far as I can see, this is something that will be demanded, especially in the midmarket, and we intend on taking advantage of that. The technology will be increasingly common. The differentiation will be in the software and how we integrate that with our ISV partners. What about all those HP 3000 users? Are you actively recruiting them to the platform?
It's hard to give precise numbers about how many users have left that platform for the iSeries, but we certainly know the interest is there. We're building on a number of references to customers that have to move someplace, and the iSeries is a great place to move.
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We definitely eat our own cooking. We've heard from users that they believe IBM Community Tools, which was also tested within IBM before it was released, is revolutionary.
We're kind of a unique part of the team. We have an ecosystem … that's incredibly enthusiastic about the product. They're really well-suited for communities where there's a bonding. We knew they'd take to it like fish to water. Our plan is roll this out to all our servers.