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October 1, 1998

OH TO BE A MAINFRAME ISV

By CBR Staff Writer

Meta Group agrees with us. There’s scant evidence that IBM Corp’s new pricing tiers for S/390 mainframe middleware is going to check in any way shape or form the rising cost of mainframe applications software (CI No 3,506). It will provide some relief to the biggest mainframe users – 6% for users with more than 2,000 MIPS, while subsystem usage pricing should improve by 10%, the research company believes. The new pricing incentives for users to host Domino, SAP, Baan, PeopleSoft and other ERP applications on S/390 will assist some users but as these do not apply to the majority of ISVs with capacity-based pricing contracts. Those we spoke to claimed their customers do not want usage-based, metered charges, and most won’t be able to exploit the opportunity. Moreover, given the 18-month timescale IBM says it will take to introduce to measure and report software usage and phase out the eight pricing tiers – ISVs such as CA will feel limited pressure to follow IBM’s improving software pricing before 2001/02.

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