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 competitive, 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.
