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IBM has one more shot at the market for mainframe client systems. The introduction of Windows Vista is forcing every big iron shop to think about replacing its XP and Windows 2000 desktop systems. These machines don't necessarily have to move to Vista. A number of organizations, notably Ubuntu, have pretty much tamed Linux for the desktop. Apple has shown that a superior end user system can be built on a Unix foundation. And Big Blue no longer has a legacy PC business to worry about, while z9 mainframes are selling like hotcakes.
The opportunity is ripe at the moment because the kind of desktop computing hardware it takes to properly support Windows Business Vista is expensive, and the PC makers are unlikely to find ways to bring their prices down for a year or two. Even then, user organization will find that the upgrade cycle is pretty costly, expensive enough to make any alternative proposed by a credible vendor, such as IBM, worth careful consideration.
This will particularly be the case because at first Vista will provide an improved look and feel but little in the way of vital business benefits, such as increased end user productivity. Whatever the potential of Vista and new software it fosters, the bills will arrive long before any payoff, and that's only if there really is a payoff. It's possible that Vista's advantages, apparent to home users who want to edit videos, assemble photo albums, or load their MP3 players with more enjoyable music aren't things that most business users will snap up. Oh, there may be exceptions, companies that really can take advantage of multimedia on the desktop, but there will always be a lot more end users helping customers puzzle out a confusing bill than insurance support personnel reviewing a movie of a mudslide taking a house away.
Besides, the multimedia possibilities of Vista are available on the Macintosh and on Linux PCs, too. And an IBM distribution of Linux for Business running on a machine specified by (but probably not manufactured by) Big Blue, to mention just one possibility, could give the Vista market a run for what will turn out to be a lot of money.
When IBM had a PC business, it was bigger than its mainframe hardware business but not bigger than mainframe hardware plus software plus services. IBM is in no danger of losing the mainframe software business no matter what happens on the desktop, at least not in the short term. The services business, however, is another matter entirely. When the client tail wags the glass house dog, IBM can lose services revenue. It can be challenged, sometimes successfully, by a software vendor whose ERP package becomes the heart of an enterprise, or by an Internet-oriented vendor whose offerings rise to greater prominence than the backroom processing that IBM understands so well.
IBM's opportunity begins at the top, among the largest companies, the ones that have very substantial mainframe computing centers. These companies are the ones where Vista sticker shock is beginning to be a key topic at budget meetings. But you don't have to be at a really big company to get an idea what's going on. All you have to do is go to the web site of Dell or HP or your favorite PC reseller. Price a PC equipped with XP Pro and a nice Intel or AMD chip, a half gig of memory and a small disk drive, plus the usual network interface and any other apparatus you consider vital. In other words, price a PC you might add in your office if there Vista wasn't on the immediate horizon. Now price a comparable PC that meets the practical specifications for Business Vista, which most likely means one of new dual-core processors, 2 gigs of main memory, a better graphics subsystem, a faster and larger disk because Vista really needs that, and maybe even a new monitor. Price the software separately, because you probably get software under some licensing deal that's not on the web menu at the place where you're buying the hardware. Chances are the XP box will come in at $600 to $900, depending mainly on what you consider a standard machine. Chances are the Vista box will come in at $900 to $1,200.
It's a safe bet that a basic Vista box for business will be a lot cheaper in a year, but if you have to budget now would you have the nerve to peg it at the cost of an XP box today, or slightly higher? You won't if you are in an environment that slathers blame on computing executiveswhen it thinks they low-balled prices to sell management on some new-fangled idea.
So maybe you should split the different and guess that the PC makers will close half the Vista platform price gap in a year. Now take the cost difference and start multiplying it by the number of seats in a very large corporation, and you'll see the size of the opportunity IBM might have if it had its own plan for the desktop, one that either didn't require a new machine at all, one that worked with hardware with the capacity of one of today's typical XP machines, or one that really did need nice new hardware to run well but didn't need quite as expensive a box as Business Vista demands.
This opportunity may or may not be lost on IBM, which could buy its way back into the desktop world in an instant by acquiring one of the outfits with a good desktop software stack or perhaps by persuading Apple to get out of computing and focus on consumer electronics.
If IBM had the courage to make a move back onto the desktop, even the most jaded big iron shops, all of 'em from Missouri, would have to see what IBM actually did before deciding to stick with the Vista migration that's been put on the schedule for next year or maybe 2008.
We reckon that any opportunity IBM has might last a year, and that's only if it announced its plans right away. Once the Vista juggernaut gets underway, nothing IBM could say or do would stand in its way. Windows alternatives will keep growing, if Apple's sales constitute a trend and if Ubuntu has any kind of feel for the daring and dissident part of the desktop systems market. But these two notable citizens of the computing universe are unlikely to have a big impact on corporate information technology during the next year, particularly at places where the IBM mainframe remains at the heart of enterprise computing.
If IBM tried to recapture desktops in mainframe country, what would the rest of IBM's customer think?
It's a safe bet that the Series i users would be happy to follow their mainframe cousins if IBM's offering came with proper support up from the midrange team. These customers are very attached to their servers and the IBM culture that's a big ingredient in the product line.
The Unix brigade might welcome an alternative to Windows on the desktop, but a lot would depend on how well an IBM client worked with the third party software that's so popular among users of every Unix variant. In other words, companies like Oracle would have to say they were behind an IBM client for the AIX-Oracle market to consider any alternative to Windows on the desktop.
As for the X86 crowd, well, they are just too diverse to predict. These users get their machines from resellers, and the resellers might or might not want to deal with an alternative desktop platform. When these companies provide PCs to their server customers, which some do, they want to have a big name behind PC support. These days, they might favor Dell or HP, which has been a problem for Lenovo. So, if IBM did offer a desktop solution, this segment of the IBM server market would react one way if IBM's offering was a software stack that ran on any computer meeting some basic specs, and quite another way if IBM tied the stack to a particular brand of PC.
The issue of PC vendors might be a factor outside the X86 base, and might even be an important issue among mainframe customers, many of whom have cut big PC deals with Dell and HP (and perhaps with Lenovo, too). It suggests that if IBM took a fresh interest in the desktop it might be far better off providing a CD than some kind of hardware.
In fact, such a move might be the very thing IBM should have done a long time ago. But it couldn't when it had its own PC business to protect. Now it can, and Vista has given it at least a glimmer of possibility.
Inside Big Blue any debate might be a battle between two camps, one that learned from IBM's decades of experience with Microsoft and one that only learned fear from the ordeal.
— Hesh Wiener November 2006