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PS, TOO, OR WHY SOME IBMers LONG FOR A STRONGMAN TO SET SILVERLAKE PRICING

For the past several months, the media have bombarded us with the adventures of a rather colourful character. He is called, by commentators who have never been formally introduced, Panamanian Strongman Noriega. His friends, of course, refer to him as PS. PS is, according to the press, a nemesis of the free world. For political leaders and prosecutors, missionaries and moralists, old PS has made Panama Canal as painful a phrase as root canal. He is portrayed as the kind of guy only an attorney on billable hours could love; the kind of banana republican on whose wrong side one would not choose to be. We have no reason to doubt the news on this matter. PS is beyond the macho pale. Your basic generalissimo, threatened with a coup or two and enticed by a bank account within a cigar’s throw of Rolex headquarters, would pack up his cap and shades in a minute. Not PS, however, not by a long shot. Told by none less than the State Department to put an egg in his boot and beat it, PS displayed the perseverance and temperament of a pit bull in a bronco harness. Astral ones Frankly, this impressed us. But for some twist of fate, or perhaps a coconut that conked him at a tender age, PS might have become an exemplary IBM salesman. A little less in the ruthless department, a little more taste in clothes and, voila! a candidate for the hundred percent club. Even the name PS would help him peddle workstations, much the way the biblical moniker Esau, spelled Esa, would be handy for a mainframe drummer. Not that IBM selects its leaders because of their names, of course. If it did, would a good man bearing the connotative handle Akers ever get to the top? Even as we write this, IBM may be sending a cadre of management recruiters South of the Border. Let’s face it: IBM needs all the tough guys it can get. By every sign, including the astral ones guiding the White House, IBM is about to take its biggest midrange gamble since the launch of the 4331 and 4341. That was back in 1979, when a machine could be called a mainframe if it made the floor sag and the lights dim. The 4300s didn’t weigh much and were cheap to feed; they also did a lot of work. When IBM announced them at something like three times better price-performance than the 370/138s and 370/148s they replaced, the computer industry was thrown into a tizzy. For with the debut of the 4300s, the fiesta was over for a lot of players. The richest lessor of the era, Itel, keeled over into bankruptcy. Makers of small IBM-compatible mainframes soon resembled the worms in bottles of mescal. Customers brandishing first-day orders formed a line nearly two years long. Big users, expecting similar improvements at the high end, switched from purchasing to rental – something the big enchiladas of IBM hadn’t figured on. Conditions aren’t the same, but IBM must be worried about a replay. Its leaders, courageous for modern Americans, do not display the kind of bravado that was common in the days of Thomas Watson. Minds of flint and wills of steel are out of fashion in these parts. Daring is not so rare in Central America, where PS hails from. Of course, in Panama, the worst problems – gringo invasions and the like – are seasonal, and the climate will change in January. In IBM’s back yard, the trouble is only just beginning. There are two disgruntled cadres that IBM’s gatos gordos must face. Big Blue’s midrange clientele has long since honed its machetes, and its high end user base is similarly restless. The mid-range problem is more immediate, and its implications stretch across all IBM’s markets. The heir apparent to the System/36 and System/38, supposedly called Olympic by IBM and definitely called Silverlake by everyone else, is about to meet a presumably adoring public. IBM has disclosed some of the product line’s characteristics, and industry gossips have embellished the story. The only issue everyone has skirted is the very same topic that IBM tackles just before it makes a formal announcement: pricing. IBM will have its camp of experts who favour a high initial price. These conservative marketing

types will try to guess the biggest figure the market will bear. The case for a high price is simple. So long as users will get more for their money, they will pay dearly for Olympic and love it. If customers resist, it’s easy to cut price later, once production has gone down that long, lonely learning curve. The appeal of the high-price road is that it leaves no money on the table and great gobs of it in the receivables column. At the other end of the political spectrum is the radical People’s Computer Company faction. By pricing low and planning for enormous sales volume, the lefties plead, IBM will earn the gratitude of the user masses. One result of a cheap Olympic is that it not only will garner orders from every S/3X shop with a MIPS famine, but it will decimate the competition. The clincher in their pitch, they hope, is that only an irresistibly low price will get the biggest part of the market – the System/36 base – to join the relational data base party. If only IBM had a fearless leader like PS to make the decision, all would be simple. We even have an inkling of the choice PS would make. It would be the people’s choice. All the branch managers would gather in some ugly stadium. A glib and anonymous soldier from the marketing force would call the meeting to order. PS would come to the podium, resplendent in his L L Bean hunting togs, Porsche sunglasses and skipper’s cap. Harangue, sir? the leadoff McMahon would ask, turning over the mike. Free the Fortune 500, PS would proclaim. Lowball the iron. Cold sweat Things being the way they are in Armonk, however, it might not happen exactly this way. The recurrent nightmares of IBM mainframe salesmen all include a 4300 scene that wakes them in a cold sweat. Nobody will admit that the problems IBM had at the high end in 1979 and 1980 were due to snafus in what at the time was called the H series, announced as the 308X. The 4300 pricing wasn’t wrong, it was right. But it was the most visible and handiest explanation for IBM’s turn-of-the-decade disaster. Before IBM could bring in PS to save the day, it would have to hire Mikhail Gorbachev as a consultant. A proven expert at revising what passes for history in a self-delusional bureaucracy, Gorby would rush in and salvage the reputation of whoever has been blamed for underpricing the 4300s – probably the recently-retired Paul J Rizzo. Improbable, you say? Well, we want to remind you that nothing is impossible for IBM. The IBM Company, as veterans love to call it, has within it an archipelago of users’ advocates. They may be few and far between, but every so often they get Big Blue to deliver a real killer product line like the 4300, the 360 or the PC. Maybe they’ll win again, and we’ll be able to hear their victory song: Yes, We Have Noriega. Copyright (C) 1988 Technology News of America Co, Inc.

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CBR Staff Writer

CBR Online legacy content.