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August 3, 1988

S/400 GOING GANGBUSTERS – BUT DEMAND FOR HIGH-END DISKS, TAPES EXCEEDS SUPPLY

By CBR Staff Writer

The atomisation of America – marketspeak for the growth of small and intermediate size US companies – has transformed IBM’s AS/400-boosted mid-range product offerings into the company’s biggest business opportunity. This was the message of Bill Grabe, IBM vice president and newly appointed assistant general marketing manager in the US Marketing & Services Division, who was sent across the Atlantic this week to discuss the company’s post-Silverlake mid-range strategy. Although able to spare only an hour between customers to face the press, Grabe covered a range of issues; key and constantly reiterated point however, was the over-night success of the AS/400, whose sales to date have reputedly smashed self-inflicted and extremely aggressive marketing targets, with many orginating from an encouraging percentage of brand new customers. Naturally, no numbers were divulged; when pressed, however, company chiefs indicated orders in the thousands, with a surprising 60% being placed for the top-end Models 30, 40, 50 and 60, thereby confounding company expectations of a 60-40 split in favour of the bottom-end Models 10 and 20 compacts. Systems Application Architecture and other claimed technical benefits aside, careful market positioning and hoopla – satellites, demonstrations, hyping et al – was the explanation offered for the considerable interest provoked by the product; a valuable lesson had been learned, Grabe conceded, by the ill-conceived 9370 Why don’t – you – figure – out – how to – use – it – for-yourselves style marketing approach. Grabe was quick to brush aside suggestions that, because orders had not conformed to the forecast pattern, customer demand would not be met with corporate supply, but admitted that short-term, some rebalancing of peripherals – mainly tape and disk drives would be necessary. For the first three to six months, it seems, US customers will be provided with the minimum number of peripherals required for useful work, with a guarantee that quotas will be met as soon as sufficent numbers become available. Meanwhile, he added, volume shipping of the central processing unit is expected to start, on schedule, in September.

Native conversion at worst a week Grabe was also able to clarify a number of technical issues. As far as conversion to the native mode is concerned, he insisted that for existing System 38 users, updating code from Cobol or RPG languages would simply take a weekend or – at worst – a week. For users of old code, however, conversion is a more complex process, with those embroiled in System 34’s assembly language forced initially to convert to System 38. Noises were also made about the tolerance of the System 36, with suggestions that greater stringency would be exercised during conversion to the AS/400 with a view to separating good programming practice from the multitude of System 36 chaff. Once converted however, customers should expect a price performance improvement of some 30%, he indicated. He was also able to confirm that development of a native operating system to support more than one processor was under way. Similarly, upgrading between the mid- to top-end Models appears a relatively straightforward and speedy process, with users gaining extra storage and performance through plugging in a number of logic and storage cards. Broadly speaking, Grabe estimates that IBM’s mid range sales now account for some 35% of all corporate revenue, with personal computers clocking up around one third and the high-end supplying just under that figure. Unsurprising in the circumstances was his assertion that, for a range of users, three tier computing was definitely here to stay.

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