Determined to boost lagging sales of the company's flagship midrange product, IBM's Systems and Technology Group will soon introduce a new family of server products for SMBs.
IBM is poised to launch a new family of server products for small and medium-size businesses (SMBs) that it hopes will reinvigorate the midrange market currently characterized by weak sales of the System i.
In a wide-ranging report to financial analysts in December, Bill Zeitler, senior vice president and group executive of IBM Systems and Technology Group, discussed this new initiative by saying that the System i would be "reincarnated" as a multi-solution platform with a combination of capabilities emphasizing Linux solutions as well as those for i5/OS. Zeitler was responding to the question, "Is the iSeries dead?" when he made the remark.
"We've already signed up a large number of the legacy iSeries software providers and quite a large number of people from the Linux world to provide solutions into this new product," said Zeitler. "So we're going to bring out a new product for the small and medium business the first part of next year , and that's what's going to happen," he said. "This is the right thing to do, I think, because in today's world there is not one platform that is the answer."
Zeitler went on to say that clients today want to be able to run Linux, Windows, and i5/OS applications on the same machine, and he implied that the new product family would run all three, though he didn't explain how they might be configured.
The iSeries and System i for some time have been able to run i5/OS and Linux in separate partitions, but running Windows required a card or blade because of compatibility issues with the Power processor architecture. Presumably, any iteration of Windows on the System i, or its "reincarnated" follow-on product, would still have to run on Intel architecture.
There has, however, been speculation for years that IBM engineers could develop a means of running Windows on the Power processor if there were an economic incentive to do so. To date, no one has come up with sufficient reason to do it. It's far more likely, however, that the way that the new family of products will run Windows is on a type of blade, just as it is run today on the System i.
Nevertheless, it's clear that the System i as people know it today is about to change forever. Zeitler likened the new family of products to the introduction of the AS/400, which combined the advanced architecture of the S/38 with the simplicity and ease of use of the S/36. If the new product family is as revolutionary as the AS/400, then the market should receive a good jolt of adrenaline. That is certainly the hope of IBM executives, who have been faced with quarter upon quarter of declining growth for System i sales.
Ironically, what may have spurred the decision to redesign the System i is the success of the BladeCenter S, a versatile means of bringing the benefits of blades outside of the data center. Zeitler said the BladeCenter S sold out immediately upon its release in December and will probably be sold out for months.
The BladeCenter S is designed for SMBs that have neither a data center, where you typically would have visually unappealing racks of processors, nor an IT staff to support one. A freestanding chassis that houses blades and can stand the rigors of a normal atmosphere, the unit features two power supplies for redundancy, and the Express model comes with four power supplies standard.
It has four hot-swap fan packs and two optional disk storage modules, each supporting up to six inexpensive 3.5-inch SAS/SATA drives. It has all the plumbing required for Ethernet networking and software to manage the broad variety of Intel and AMD-processor blades. The product literature indicates the JS21 Power blade for running AIX and Linux will run as well in the BladeCenter S.
It could be, then, that the new versions of the SMB family of products are either preconfigured iterations of the BladeCenter S or a similar type of modular box that users configure when ordering, depending upon their needs and the solutions that will serve their purposes.
Zeitler told the analysts that the proposition that IBM will present to business owners is that they don't necessarily have to buy all the capability that the new midrange family of products can potentially deliver. If they need to have a solution that runs only on i5/OS, then they would buy one form factor. If they had just a couple of Windows solutions, then they would buy another.
"You go to a small business, and you can say, 'You don't have to buy all of these things, you can buy one,' " Zeitler said. The key, he said, is to keep it simple, which was the idea behind the AS/400 in the first place. "The idea of having something simple is the right idea; we just got away from it," he said. "We focused too much on the technology of the product and not the problem the client had."
Zeitler said that the changes the company made in July-in which it grouped the larger enterprises and then offered them a choice of System p or System i or even combinations of the two-is working quite well. The reason is that the larger enterprises are seriously interested in consolidation, and most run more than one operating system. Since both the System p and System i are based on the same technology, offering consolidation solutions has found a sweet spot.
Zeitler elaborated on the trend toward consolidation among larger enterprises, pointing out that, in addition to a "crisis of complexity," many of them have added so many servers that they simply cannot physically supply more power to their data centers; the utilities serving them can't or won't deliver it. He scoffed at the self-appointed analysts in the media who continue to place green IT issues at the bottom of the ladder in importance, saying that the problem may seem unimportant until you actually run short of electricity.
There are large financial institutions that have acquired as many as 60,000 servers; they are out of power lines, and they still are short of capacity. Something has to give. IBM is ideally positioned to help solve these problems, he notes, because not only does it have the services to re-plumb an entire data center, but IBM itself operates one of the largest data centers in the world and is faced with the challenge of consolidating its own server farm.
Regarding the System z mainframes, it seems that the sub-prime mortgage meltdown had a more widespread effect on the economy than one might guess from reading the headlines. Zeitler said IBM had a number of System z sales in the pipeline during the fourth quarter with financial services companies that had a crying need for expanding capacity. But getting the contracts signed and the systems installed proved to be nightmarish. Though existing models were getting a bit long of tooth, it seemed that the uncertainty of the real estate mortgage market was affecting buying decisions. The result was a very disappointing quarter for IBM mainframe sales, but it had nothing to do with the viability or demand for mainframes, he said.
One of Zeitler's themes was the importance he places on collaboration between companies that can each provide a portion of the solution for the client. "I don't think any one company is going to be the answer," he said. "Collaborating is going to be important. Competition might come from different directions," he said, noting that former competitors are collaborating and new companies such as Amazon, which is getting into the services business, are coming forward to challenge the traditional vendors.
Zeitler is optimistic about returning IBM server sales to an upward curve, saying that the company will be putting 40 percent more people into "customer-facing opportunities" than it had last year, and it would be introducing more new products during the first quarter of 2008 than it has in any period during the past decade.
Fresh new products designed around what clients want and a large increase in people to present them to customers and follow up with help spells a winning combination for Zeitler, who is confident that the aspects of the market the company can control far outweigh any aspects that it can't.
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