Seek and ye shall find: the Epiphany of IBM

Aficionados of ITV's Coronation Street may not appear to be the most responsive audience for messages about IBM's server technology. But, between recent episodes of the soap, they could hardly have missed Big Blue's advertisements, which attempt to define life's Epiphanic moments.

As the black preacher figure in the ads solemnly declaims, to discover that there is a vital difference between the sexes "is an Epiphany". Likewise, to realise that business will be transformed forever by the internet.

And last week, right on cue, IBM fleshed out the intrinsic message of its adverts - that its technology is at the heart of ecommerce - by rebranding its entire server range, from Windows NT boxes up to mainframes. Out went the old familiar brands of the AS/400, RS/6000 and S/390 in one sweep, and in came the umbrella prefix of eServer.

So far so good. But then, as if inspired by a marketing manager from Planet Zog, the respective names of the AS/400, RS/6000 and S/390 were further changed to the iSeries, the pSeries and zSeries. And for good measure, the Intel-based Netfinity family was given a similarly futuristic tag and rechristened the xSeries.

But for many in the industry, including customers, the changes have not so much cleared up any confusion as left them scratching their heads. Among them is Ray Titcombe, chairman of the IBM UK users association, who fears that Big Blue may have gone down with "a touch of the dotcom fevers". He points out that ecommerce servers account for only a fraction of the machines deployed in your average corporation, and that an over-emphasis on this area could have a detrimental affect on the sale of more mainstream systems.

Also, in the UK at least, ecommerce represents less than 0.5 per cent of national gross domestic product and any strategy should be viewed in that context.

But last week, IBM was having none of it. According to its calculations, there will be 2.6 billion network devices scattered around the globe by 2003 - bolstered by a new generation of internet-enabled mobile phones and personal digital assistants - which will generate a thousand-fold increase in data flowing across web-based networks.

This means, according to Big Blue, that IT infrastructures risk being overwhelmed by a "tidal wave" of transaction-based traffic in future, resulting in a likely plague of network crashes that only the most robust servers will survive.

Server technologies
Awesome if not apocalyptic, as IBM's TV preacher might say. But beneath the rebranding exercise, there is also a fundamental consolidation of Big Blue's server technologies going on. This, believe analysts, could point to a more strategic repositioning of IBM as part of its battle with the likes of Sun Microsystems, Hewlett Packard (HP) and Compaq on the hardware front, and Microsoft on the operating system (OS) side.

Industry watchers are also suggesting that, in some senses, the move marks a return to IBM's yesteryear ethos of providing customers with a one-stop shop that can cover all their needs - but this time, with an ecommerce twist.

The main tenet behind the new eServer range is that it will ultimately be based on a unified, scalable architecture, which can run all the tried and tested applications available today, but also embrace open standards such as Java, HTML and HTTP. This should mean that the servers can fit into the Brave New World of ecommerce with minimum effort.

IBM is also enthusiastically endorsing Linux as part of the initiative, in a move presumably intended to dent the ecommerce ambitions of Bill Gates and Microsoft by encouraging the spread of open Unix.

But it is a strategy that also leaves many questions unanswered, not least the future direction of Big Blue's more proprietary platforms and Oss, and how customers, who are used to dealing with one division of the IBM empire, will now be supported.

Take the S/390, for example. The supplier's mainframe sales have declined on a year-on-year basis for four consecutive quarters now, despite three decades of solid development effort. And although the OS/390 OS complies with all major Unix standards, this ploy has hitherto singularly failed to win over new users - migrating upwards or otherwise.

At the same time as introducing the rebranding exercise, however, IBM has also introduced the zSeries 900 - the first mainframe to be built from scratch that makes ebusiness its primary function. The system also includes a new 64bit OS, the z/OS, and has cost Big Blue a cool $2bn in research and development to build.

As Tony Befi, IBM's vice president of technology, told the audience when he launched the offering in Vienna last week, customers could now use a single z900 to do the same job as a "football field of Sun or HP servers".

But over at Gartner, research director and vice president Tom Bittman stresses that the S/390 revamp has more to do with deterring existing customers - especially those interested in ecommerce - from defecting than getting new ones on board.

He points out that about half of all IBM's total revenues still come from the mainframe market and the last thing it wants to see is customers buying Sun or HP Unix servers.

Although he acknowledges that Big Blue's mainframes, including the latest zSeries, can run Linux on a partition, there is "no way that IBM mainframes are replacing the Aix operating system or the RS/6000 in the Unix space".

He also points out that, while it is technologically feasible for customers to port existing mid-range applications to their mainframes, it is also cost prohibitive.

So why rebrand everything from mainframes to Intel boxes under the same eServer nomenclature?

Bittman's answer is that IBM, after having pushed the message that the world needs heterogeneous IT systems for years, is a now doing something of a volte-face on the branding front.

"In marketing terms, it was stuck," he argues. "It tried to push these four different platform personalities, but it's a strategy that simply didn't work. Now it's going for a single brand based on the strength of the IBM name alone."

Software pricing
Meanwhile, Big Blue has also taken pains to simplify its complex mainframe software pricing mechanisms. This means that the z900 fees will, in future, be based on how much the software is used, rather than overall system capacity.

It's a model that points towards renting rather than licensing, and mirrors similar moves by Microsoft and others in the industry to adopt application service provider-style methods of charging for software by the drip.

But if, at the top end of the scale, the zSeries can both match a "football field" of rival ecommerce servers and function as a stand alone, albeit turbo-charged, mainframe, where does that leave IBM's mid-range boxes? And in particular, what happens to trusty old workhorses such as the AS/400?

Some pundits believe that the time is drawing near for a merger between the AS/400, IBM's flagship proprietary server, and its Unix brother, the RS/6000 - a move which would imply that unified branding is just the first step.

After all, there is already a great deal of overlap in terms of shared components and development teams. The machines roll off the same production plant at IBM's Rochester, Minnesota facility, while the AS/400 - with its installed base of 650,000 - also supports Unix applications through its Portable Application Solutions Environment (Pase), a native Aix partition running within OS/400.

Even Frank Soltis, the legendary architect of the AS/400, has stated in the past that he would like to see the two platforms merge, but he has hitherto been overruled by management, which wanted to keep the boxes separate for business and marketing reasons.

It would be possible to combine the products technically "very quickly", however, he says. Moreover, the AS/400 is already appealing to smaller S/390 customers who are concerned about operating costs.

Scalability is key
Could this be the missing link in IBM's masterplan? The scalability of NT has always been an issue. But if, in future, IBM could promise its customers a single mid-range box, based on 64bit technology, which provides the same reliability, availability and compatibility that they've enjoyed with traditional systems, it would be something not only for Microsoft to chew on, but also HP and Sun too.

This becomes an even more promising proposition for customers - especially the new generation of dotcoms that can't necessarily afford huge capital outlays, but that can see their processing demands rocket overnight - if Big Blue were to eventually base all of its proprietary platforms on the same technology and usher in a software pricing model where fees were calculated on workloads rather than system capacity.

Revamp, rebrand, refine, re-price...such ingredients all signal a major overhaul of IBM's server strategy.

But if that is the ploy, it is one that will rely on thousands of existing independent software vendors joining Big Blue's new Unification Church. And it will also necessitate the whittling down of software lines - perhaps even making some programs obsolete, something that IBM has eschewed in the past.

Even more importantly, customers old and new will need to play ball. But, according to Gartner's Bittman, IBM had to do something because sales of both the AS/400 and S/390 are slowing, and it doesn't receive much of a profit margin from its Intel or RS/6000 boxes.

"Even with the AS/400, only five to 10 per cent of sales are to new customers," he claims. "And very few of those are in the US. Much the same is true of the S/390."

But the trick for IBM is how to encourage new revenue growth without alienating its different customer bases. "Unified branding at least reassures existing customers that proprietary technologies have a future, and that if users do want to go down the Intel or Unix path, IBM is still with them, making it easier and cheaper," Bittman added.

It remains to be seen whether users will be persuaded by IBM's new homogenous server identity or still feel that on a deeper, technological level, rivals such as Sun offer a more compelling Unix argument.

While Compaq, for one, is taking also the single brand tack, the main difference here is that it is focusing purely on Unix and Intel rather than worrying unduly about how to salvage its legacy systems.

Either way, Gartner's Bittman believes that e-servers are merely a key to the door in IBM's long-term strategy of making services, software and OEM relationships the top priority. Win over the new generation of business to business ecommerce customers - rather than mere dotcom players - and satisfy their supply chain needs and all the rest follows.

Back at the IBM UK users association, Titcombe still has doubts about the new strategy. "It might take away the nervousness about the scalability of various processors and technologies, but at the same time IBM is putting forward a bit of a black box solution for everything, distancing customers from the technology," he says.

"Otherwise, I can't see much rhyme or reason to the new branding. But then deep in the bowels of Armonk, who knows how or why these decisions are made?"

Time for divine revelation perhaps. Or what about another Epiphany?