IBM server finds new fans

Big Blue's AS/400 is catching on with many of the latest generation of software vendors as a viable and profitable platform.

2 min read
What's in with the younger generation these days? Bell-bottoms, VW bugs, and...AS/400?

That's right. IBM's old standby proprietary server system, the AS/400, is catching the eye of many of the latest generation of software vendors as a viable and profitable platform on which to port their product.

Enterprise resource planning vendor SAP has done it. So has PeopleSoft. J.D. Edwards has based its business on it and soon Baan reportedly also will tweak its application package to run on the AS/400.

"From a user perspective the attraction has always been that the AS/400 is an easy-to-use, easy-to-support platform," said Jim Shepherd, analyst at AMR Research in Boston. "The attraction to vendors is simple: there is a huge installed base of AS/400s and the people who have them are very loyal. They like the box and they are inclined to keep it. No matter how good your applications are, if it doesn't run on the AS/400, they won't buy it."

And for the enterprise resource planning software vendors like SAP and Baan, that's more than 450,000 AS/400 systems out there that could be running their product.

But that's not to say that the AS/400 is seeing any kind of new life. Just the opposite is true in fact. According to AMR Research, the growth rate of AS/400 sales among the enterprise resource planning vendors is steadily declining.

"AS/400 sales are not plummeting, but they are diminishing," Shepherd said. "In 1997, new sales of the AS/400-based enterprise resource planning products dropped 18 percent as of 1997."

This is part of the reason why vendors who have long-based their product on the AS/400 platform like Systems Software Associates in Chicago or Denver-based J.D. Edwards are either hurting--the case with SSA--or have rebuilt their products to run on more open platforms like Unix or Windows NT.

But as enterprise resource planning sales to the upper echelons of the market, mainly the Fortune 500, become saturated, the software firms must turn for new sales to the middle-tier companies where the AS/400 is firmly grounded, particularly among manufacturing firms. These companies have a long history with the machine and know there is a huge pool of talent and resources to call upon for support. After all, the AS/400 is undisputedly the most successful platform in history and that has created many knowledgeable users.

"This represents, for most vendors, a nice incremental business they couldn't get to any other way," Shepherd said. "So if I'm Baan and I'm targeting the middle market, no matter how old and tried my applications were, I wasn't going to get any AS/400 business. So, if you are going to play, you've got to be on the AS/400."