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IBM, Microsoft, and Oracle Unveil New Offerings

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As IT veterans, we know that our industry is a place where heated competition between vendors is the norm. To casual observers, however, that competition may appear at times to be quiet and even dignified. Depending on where they are looking, such onlookers may see no finger pointing and hear no heated exchanges. They fail to see the subtle maneuvers that the protagonists are making to improve their positions in the market.

As it turns out, last month was one of those periods when such maneuvers were the order of the day. As the lead story explains, IBM was one of the vendors that was quietly working to gain an advantage.

IBM and Its Partners Sweeten ServerProven

Last week, IBM expanded its ServerProven rebate offering to include the newest System i5 models. In addition, a handful of the biggest iSeries software vendors agreed to double the current rebates when customers purchase software or services from them.

Under the ServerProven program, North American customers receive a rebate when they purchase selected solutions from software vendors that take part in the program and then install those solutions on a new (or newly upgraded) iSeries or System i5 model. The rebates can be as much as $68,000 (U.S.) when a System i5 Model 595 is purchased. Last week, IBM tweaked ServerProven by adding the System i5 models that it announced last month to the list of servers that customers can purchase or upgrade to in order to qualify for the rebate.

On the same day, a handful of ServerProven software vendors took the rebate program one step further. The vendors—who include International Business Systems, Infor Global Solutions, Intentia, Lawson, Oracle, SAP, and SSA Global—agreed to pay rebates that are twice as large as those offered under the current program. Moreover, they agreed to offer the rebates not only when customers purchase new software licenses, but also when they purchase implementation services, migrate existing licenses from a non-IBM server to a System i5, or pay software tier charges on an existing license by upgrading to a System i5.

The new "double your rebate" offering is part of a focused campaign on the part of the iSeries Division to compete with rival servers for mission-critical application workloads. While such workloads have been the iSeries' strong suit for years, Intel processor-based servers have increasingly been competing for those workloads. The sweetened rebate offering gives companies one more reason to keep their enterprise applications on the iSeries or bring them back to the server.

Microsoft's Multiple Vistas

After months of anticipation, Microsoft has unveiled a plan to offer six versions of its Windows Vista operating system during the second half of this year. While the plan will give users significant flexibility to choose the software functions that they want, the number of Vista versions and the license terms associated with some of them may frustrate customers more than delight them.

Under the plan, consumers and businesses will each have three different versions from which to choose. On the commercial side, Windows Vista Business will act as the base offering. It will include the new Vista user interface known as Aero as well as Windows Tablet PC capabilities that let users interact with the operating system using a stylus or fingertip. The second version, Windows Vista Enterprise, will build on the Business version by adding data encryption technologies and virtual environments that run legacy Windows applications and UNIX software without changes. Finally, Windows Vista Ultimate will combine all of the above features with the multimedia capabilities of Windows Vista Home Premium, such as the ability to author DVDs.

Before picking a version, businesses should know that Windows Vista Enterprise will be licensed only to companies that have a paid for a Microsoft Software Assurance or Enterprise Agreement contract. Many small and medium-size businesses have not signed these contracts because they do not believe they will receive adequate value from them. One of the biggest objections to the agreements is that they do not guarantee that license holders will receive a new version of Windows during the term of the agreement.

As companies begin evaluating Windows Vista later this year, I expect that many will be attracted to the capabilities of the Enterprise version—particularly its legacy application support—but will be loath to sign an SA or EA contract. This could lead many firms to hold off on Vista upgrades as they consider various options. It will be interesting to see if such resistance materializes and, if it does, how Microsoft will respond to it.

Red Stack or Blue Stack?

For years, iSeries software vendor JD Edwards shipped IBM's DB2 database server and several WebSphere products with every copy of its EnterpriseOne applications. When Oracle acquired JD Edwards last year, it continued the practice. Last month, however, Oracle quietly began offering EnterpriseOne users a new option. They can order either IBM's "blue stack" with new copies of their applications or a "red stack" (Oracle's corporate color) known as Oracle Technology Foundation that includes the vendor's database and a bundle of its Fusion Middleware components. While EnterpriseOne has always supported the Oracle database along with DB2, it gained support for Fusion Middleware only late last year.

Oracle's new offering is a reminder that even though the software giant is building a close partnership with IBM around its applications, it still competes with Big Blue in the database and middleware markets. Fortunately, that competition has become more polite than it was in the past. For instance, Oracle regularly reminds JD Edwards customers that it will support their applications on DB2 and WebSphere through 2013 at the least. This support pledge comes from a company that used to call DB2 a technological dinosaur. The company even towed a blue dinosaur around the streets of San Francisco during an IBM event that I attended in the city.

While relations are much better between the two firms today, old competitive habits could still rear their heads. Whether they do so could depend on Oracle's impending decision about letting its next-generation Fusion applications run on DB2 as well as its own database. When the company makes that decision, it will have a dramatic impact on the IBM-Oracle partnership. Just as importantly, it will have a big impact on the 15,000 companies that do business with both vendors. Let's hope that the impact is a positive one.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

Lee Kroon
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.
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