IBM's iSeries announcements are crucial to its future, and they will also affect IBM's other eSeries ranges. The proprietary mid-range iSeries machines have a declining revenue, but a very loyal user base. As with its zSeries mainframes, IBM has to decide whether to promote them for the long-term, or milk them for medium-term revenue. Meanwhile, the Intel-based xSeries and RISC Unix pSeries machines are jockeying for position in expanding, but more competive, markets.
IBM does not quote revenues from its servers separately, but analysts estimate that xSeries is growing fast, pSeries is growing slightly, zSeries is declining slightly, and iSeries is declining faster. ISeries probably declined by 11 percent in the last quarter of 2002, according to analyst John Jones, of SoundView Technology Group, quoted in iSeries Network. He reckons that zSeries dropped 2 percent, pSeries grew 2 percent and xSeries grew 16 percent, adding most to IBM's overall hardware profit growth of 1 percent in the quarter.
This may reflect little more than the dates at which each one got properly inducted into the eServer family. XSeries' makeover was most recent, while the iSeries has, until now, been part of the eServer range more in name than in practice.
This announcement certainly changes that. IBM has added up to 80 percent to the iSeries' price-performance, made them price-competitive with Unix machines and kicked out 1980s-style proprietary pricing structures. In future they will be positioned as a consolidation server for Windows systems, Linux boxes, SANs and pretty much everything else in the IT department.
The only question is -- will it work? Or is IBM "doing a Warp"; repeating its costly mid-1990s effort to promote its OS/2 desktop operating system against the rise of Windows?
Analyst reaction is positive, but the effect on the bottom line remains to be seen.
The biggest iSeries news ever?
This is the biggest iSeries announcement since the machine was launched, as the AS/400, in 1988. Along with the appointment of IBM heavyweight Al Zollar to run the iSeries unit, it shows that IBM does not intend to let the range -- which was built around innovative software ideas from the start -- waste away in the face of commodity servers from other suppliers, said worldwide iSeries product manager, Ian Jarman: "IBM is continuing to invest in the iSeries."
Analysts agree with this. "All in all, it's a pretty colossal announcement," said Ian Bramley, managing director of Software Strategies. "Over the last few years, since IBM rebranded its servers as eServers, we've seen them transform each line in turn. Last year it was the xSeries -- now it's the turn of iSeries."
The announcement introduces real-time capacity upgrade -- and downgrades -- on demand, integrates the product more tightly with software, and radically reduces the costs, and the complexity of the range's pricing.
Big Blue wants to see iSeries bring Windows servers under control -- and is planning a similar role with Linux servers as they appear in iSeries shops. iSeries servers now run Linux and many come with a free processor and Linux distribution in order to encourage IT managers to try opensource applications out.
The announcement is a vote of confidence. iSeries has a large installed base, who claim to get very low cost-of-ownership. IBM had to choose whether to allow this base to dwindle gradually and move them onto other platforms, as other suppliers like HP have done with their proprietary mid-range systems, or to re-energise the iSeries itself and attempt to grow its user base.
"IBM intends to go back very strongly with partners, ISVs and channels and re-energise the market in the next few years," said Bramley. As well as keeping existing customers, IBM hopes to bring in new ones, through application-specific sales with partners such as J D Edwards.
New boxes and prices
The company has launched two new iSeries boxes, the i800 and i810, for small-to-medium businesses, and replaced a horrifically complex set of enterprise machines with three -- the i825, i840 and an improved version of the i890. Each one is an iSeries version of one of IBM's pSeries Unix systems -- the two ranges have had common hardware for several years.
The price shake-up has a basic goal: hardware price equality with the pSeries, which is itself very competitive with other RISC Unix platforms. Perhaps the most exciting price change for iSeries users is the dumping of the much-hated "interactive features" pricing structure, whereby users had to pay extra according to how much terminal-based transactional work they were doing on the system. Now, each box comes with a flat price.
"Customers pay one fair price," said Jarman. "It will be simpler and cheaper for big enterprises."
"In the past, this platform has been price-per-bit rather high at its initial price, but has had an enormously better cost of ownership," said Bramley. "Analyst studies have said the total cost over three years is as little as half that of RISC Unix -- thanks to its manageability." This announcement could improve that further, but reducing the initial price difference.
The only major variable within each machine is the number of processors, and the choice of a Standard or Enterprise edition. The Enterprise edition comes with pre-integrated stack of bundled IBM middleware, including WebSphere, the DB2 database, Tivoli management and Lotus Sametime. IBM claims this alone is worth around $400,000 on high-end systems.
"iSeries is going to be more software driven, with Al Zollar in charge," said Bramley. "The technology is entirely hardware transparent, which makes it the only fully 64-bit server in which every users application is 64 bit."
Upgrade on demand
The ability to upgrade capacity on demand -- and then down again when the crisis is past -- is an industry first and a calculated risk on IBM's part. Every server ships with extra processors that can be activated, when required for a fee. Typically, a processor that would cost $30,000 to buy can be used for a cost of $1,100 to $1,300 per day.
IBM has had capacity on demand for permanent upgrade on its top models for some time, but that only allowed upward movement. IBM is now offering temporary capacity to cover peaks, which can be run for a period and then "sent back". Like a mobile phone contract, the company's contract even includes some free processor days.
"This is unique because it is truly dynamic," said Jarman. "You can switch power on and off without reconfiguring."
"IBM is taking a bit of a risk, putting out machines with processors in them, and not knowing if they will get any money back," said Bramley. "It is very very useful for customers, and they seem to have a through job of making it workable for both parties."Can iSeries swallow Windows and Linux? The Windows integration story is one that should appeal first to existing iSeries users. Around 90 percent of them also have Windows users -- on average around 20 of them -- and are finding them more difficult to manage than their iSeries box. "Everyone has discovered the difficulty of managing Intel over the last few years," said Bramley. "This is a very good way to do it." IBM proposes that the iSeries can manage the Windows servers -- and even swallow them up, by moving them to onboard Intel processors within the iSeries box. "IBM wants SMB customers to use this highly manageable system to run not just OS/400 workloads, but also to host and manage Windows servers, through onboard or attached xSeries servers," said Bramley. High Speed Link attachments allows these to connect at backplane speeds. IBM's Linux play on iSeries is based on the likelihood that iSeries shops will want similar services in a few years. At present, Linux penetration is only around five percent in iSeries shops -- much lower than elsewhere, as iSeries users tend to a little risk-averse -- but they are expected to grow. "There is a huge emphasis on Linux," said Bramley. "It is at an early stage, but maturing rapidly." IBM includes a free processor and Linux distribution to encourage iSeries managers to try the open-source operating system out -- and Linux will run on the main processors in LPAR logical partitions. "IBM wants to be ready to support Linux applications as they come to be used in this community," said Bramley. "This shows all IBM's corporate commitment to Linux, on this platform." With 400,000 machines in use by around a quarter of a million customers, iSeries has by far IBM's largest platform customer base. This announcement should give them something to think about. Perhaps one opportunity will be to sell this iSeries for storage virtualisation. "The single level store idea of iSeries has been brilliant," said Bramley. "It is completely unlike any other class of system." By extending these services to Windows and Linux, IBM may create an easier way to manage storage. "I think you could justify iSeries on storage area networking alone," said Bramley, "Only on large sites, but it would be a very effective way to do it." Despite the iSeries' image as a closed, proprietary platform, it supports plenty of standards in the bundled middleware, including J2EE. "The days when you could see this as closed proprietary box are long gone," said Bramley. IBM is porting a native version of its own AIX Unix to the platform, so next year it will run in its own partitions. The company is also working to make sure developers keep iSeries in their sights: former iSeries manager Buell Duncan has been moved to IBM's developer relations organisation. Conclusions While some analysts like Bramley are positive, others are sceptical, even of such a major announcement. "[ZSeries and iSeries] remain valuable platforms in slow, long-term decline," said Tom Bittman, Gartner Group vice president and research director, quoted in iSeries Network. Bittman acknowledges that IBM's efforts to focus on small-to-medium businesses, and include more software, should bring results, but won't make much difference to first-quarter revenue. The stories of platforms like iSeries take place on longer timescales. An increase in its fortunes this year could make a very big difference to its long-term lifespan. But either way, the platform is not going away any time soon.