Tuesday, May 6, 2008

A battle of tag lines – who are you going to call?

I am back in Boulder for a few days before heading back to Europe. This time I will be mixing in a little vacation time and I am looking forward to decompressing. The picture I have included here is of what “Springtime in the Rockies” looks like – with the Snowberry tress in full bloom. After so many months of lying dormant, it never ceases to amaze me how magic the place becomes in spring.

Earlier today, the Reuters agency reported that IBM senior executives Bill Zeitler, Senior VP and Group Executive, Systems and Technology Group, and Nick Donofrio, Executive VP, Innovation and Technology, would be retiring. Bob Moffat would be replacing Bill, but Nick’s position would not be filled. No replacement for the head of Innovation and Technology it appears – yet the folks over in the systems group (where the big iron comes from) will get a new boss immediately.

I surfed the web for other press reports and began to “google” for more information. But it wasn’t the stories that caught my attention, although the number of reports was pretty slim, as much as all the different tag lines and messages I found IBM using these days.

Why IBM Software? And the message from IBM was “Open. Scalable. Secure. Industry focused. IBM Software product and solutions help you innovate and become more flexible, while making the most of the current resources and controlling costs.”

Why IBM Systems and Servers? Again, the message from IBM was “IBM Systems can provide building blocks of simpler, more integrated infrastructure that can power innovation while helping you protect your current investments and dramatically improve the economies of IT.”

Apart from looking like the collective thoughts of multiple committees, it was the inclusion of “help you innovate” and then “can power innovation” that I found most interesting. Recall the TV commercials IBM ran that featured Innovation Man?

“I am Innovation Man! I am here to get you all fired up about Innovation! Are you fired-up? … I said, are you fired up?”
“Why are you fired-up?
“I haven’t any idea …”
“Aaahhhhhh …….”

And so we now read that the most senior IBM executive for Innovation and Technology is retiring and there will be no replacement – several of his reports will now report directly to Sam Palmisano, IBM’s Chairman and CEO. Curious – isn’t innovation a key driver within our industry? As much as I am interested in innovation however, it is the changes at IBM’s Systems and Technology group that interest me even more. This has been the heartland of the mainframe and today, more than 50 years after the mainframe first appeared, nothing gets IBM quite as excited as the deployment of a new mainframe.

But isn’t the mainframe business dying? In the months before IBM announced the z10 mainframe, didn’t Gartner report that mainframe server revenues were plunging? And doesn’t the mainframe server stand apart in the IBM systems group – leveraging very little from the other platforms? At a time when IBM has elected to go with blades for both the System i and System p platforms, the mainframe continues to remain untouched by the forces of commoditization sweeping through the industry maintaining layers of complexity that only expensive IBM services folks seem to know how to orchestrate!

In InteropNews, an electronic newsletter primarily for the Windows, Linux, and Unix community, columnist Jeff Gould in a piece titled “Will the mainframe ever die?” asked “Why aren’t these cantankerous old beasts as dead as diplodocus and triceratops?” He then goes on to quote from the same Gartner report “IBM’s mainframe hardware revenue plunged precipitously during the 1990’s … to a measly $4 billion in 1999.”

But Gould then looks at the latest figures and begins to see the true impact of the mainframe on IBM. “A quick back-of-the-envelope calculation based on IBM’s breakout of its Q4 2007 numbers suggests that 40% of its software business and perhaps a third of its services revenues are ultimately driven by zSeries hardware. That would put IBM’s overall take from big iron at roughly $30 billion per year.” Whether this is accurate or not – the point is, IBM replaced its head of Systems and Technology group pretty quickly, as almost one third of all of its revenues are related to the success of its big iron mainframe platform.

Now contrast that to what we are seeing with HP, and with the influence the NonStop line is having on HP. But before going any further, what is HPs tag line these days? “HP focuses on simplifying technology experiences for all of its customers – from individual consumers to the largest businesses.” As I contemplate a little down time, I can sympathize with those that seek simplicity as I look forward to quiet strolls and long naps.

The original Tandem Computer was a radically innovative breakthrough technology – it changed the rules. Computers could be deployed into the most mission-critical areas of the business, where any downtime seriously impacted the business. In situations where customers had a choice, one factor that drove them to a competing offering was the dreaded “out of service” message. With the fault tolerant technology within the Tandem Computer, no single point of failure would take it down. It would just run. Over the years, the configurations grew and the capabilities of the platform began to match the biggest big iron mainframe offerings. When the Cyclone appeared towards the end of 1989, its physical appearance was hard to overlook and it had certainly grown bigger than any other midrange or front-end computer of the day. In hushed tones around the corridors of Cupertino, there was even speculation that Tandem had hatched a “pocket-mainframe” that was the equal to any mainframe “battleship” available from IBM.

How big an impact is the NonStop having on HP? It is hard to ignore the impact of HPs own use of the core NonStop technology (in Neoview guise) in the huge, company-wide, server and application consolidation program where it will be supporting Petabytes of data. But this is just the starting point. Saving costs is only one side of the ledger – generating revenues is always the biggest issue. When you add up the revenues HP generates from the software on NonStop, the services being provided, its role in key industry segments such as Telco and Finance, and look at the impact of the arrival of a new application such as Neoview, then the whole is considerably greater than the parts.

With its roots deep in OnLine Transaction Processing (OLTP) where availability, scalability and data integrity were paramount, its selection by companies needing the most-available mission critical server came as no surprise. And it’s this ability to continuously exceed expectations, in the mission critical application space, that keeps it relevant for many CIOs. But again, the argument always comes back to costs and it’s here where the paths of IBM and HP may soon begin to diverge with the advantage headed firmly HPs way.

The soon-to-be-announced bladed architecture in support of all platforms, including NonStop, will only drive the product costs down. Commoditization is what it’s all about – and HP has elected not to keep the NonStop product line separate (as IBM continues to do, with the System z), and to include it as an integral part of the blades program.

Returning to Gould’s column, where he observed “IBM has bumbled along by persuading customers to surround legacy apps and data with expensive Java middleware implemented by even more expensive professional services. But inevitably the time will come – probably sooner rather than later – when this strategy chokes on its own complexity and cost.” Recognizing the changes that are coming, Gould adds “it does seem that common sense is on the side of the ‘commodity’ platforms.”

Mission critical applications will continue to demand even faster processors, and as long as the NonStop product costs continue to be exorcised, HP will see even more growth from the HP NonStop platform. HPs message is very simple – they are going to simplify technology! Tag lines may not always serve the buyer well, but in this case, it certainly brings with it an expectation that through simplicity will come considerable cost reductions.

I’m heading off for some downtime and plan on doing very little of anything, and just decompressing. But can a major vendor, like IBM, ever ease up? IBM had been pushing innovation – but where will the leadership come from now? And if they don’t continue to push innovation, then what will they be pushing? Certainly, not simplification!

It’s probably way too early to herald success for everything HP is doing, but it will be an interesting year! I guess I shouldn’t plan on talking any serious downtime!

No comments: