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I am only kidding, aren't I? Aren't I?
I am at this moment using Windoze 98! I much prefer either of the OS/2 versions I have installed, and was going to sign up for ibm.net, when I heard IBM had sold it to AT&T!! Looking at the att.net site, it doesn't look like they support OS/2. Perhaps your AT&T service is also through Windoze... (or a Win-OS/2 session, but I really would like a non-Windows 3.1 ISP; I use CompuServe as my ISP, which works fine with Win-OS/2.)
In the early 60s, the board correctly foresaw the business benefits inherent in centralizing data processing and launched the System 360 to capitalize on the opportunity. However, by the early 70s, technology prices had started to fall... A small company called Digital Equipment saw the potential of distributing processing power from central site to department and launched the VAX/VMS system as their solution. This also heralded the rise of the ISV. The board of IBM did not pay much attention to this development, basking as they were in the success of the System 360. But there were shrewder minds in middle management and there sprang up a number of unrelated offerings aimed at this new opportunity, such as the Series 1, the System 3 - even a rack mounted mainframe! These efforts culminated in the ill-conceived and badly executed 8100 program, which, by the early 80s, had left several billion dollars of red ink on IBM's bottom line - and one of the major reasons for its failure was that it paid scant attention to the ISV community. By this time a new phrase had entered the IT lexicon: "IBM has made DEC into a $bn company".
Stung into action by the company's public display of incompetence and the large amount of money being spent in a marketplace where IBM had no coherent offering, the board finally swung its weight behind a single program to compete head on with DEC. The result was the AS/400 system which was launched 12 years after DEC staked their claim. It paid careful attention to the ISVs and secured for IBM a respectable share of the midrange marketplace. (When IBM was dragged kicking and screaming into the Unix world a year or so later, this attention to ISVs was also very evident.)
But the price of technology continued to fall... This time it was a small company called Microsoft which saw the opportunity to further distribute processing power from department to desktop. Once again the board missed the significance of what was going on but once again there sprang up a number of offerings aimed at this market such as the IBM PC, DOS, DisplayWrite and OS/2. Once again these culminated in a poorly executed program - Warp 3 - which once again did not pay sufficient attention to the ISV community. In parallel with all this, the company oversaw a constant decline of its 100% hardware PC share in 1985 into a 5% share by the year 2000 - and with all the attendant red ink. The only difference this time around is that I haven't actually heard anybody say that IBM has made Microsoft into a $bn company! The reason for IBM's lackluster performance at the desktop is that, unlike the central site and midrange marketplaces, where IBM has a system solution around which to build, there is no "PC system solution", which leaves individual products isolated against competition. Like it or not, the market has moved closer to the end user and IBM hasn't.
The mid-range story suggests that for IBM to capture a respectable share of the desktop (and, more importantly, of the large amount of money being spent in this marketplace), there is no option but to bite the bullet and compete head on with Microsoft. Some people will say it is too late, but these Jonases said the same thing after the 8100 debacle.
There are two reasons why such a venture would be successful, just as similar reasons prevailed in the mid-range marketplace fifteen years ago:
Perhaps some of the welcome news/rumors about Warp 5 are at last suggesting that the board is beginning to wake up to the size of the opportunity which is passing it by.
After I met a sales person, I asked about WSEB or the Lotus SS upgrade. The fellow didn't even bat an eye before he told me IBM had discontinued OS/2. It was no longer available and could he help me find something else.... After a bit of a run around, I was able to find someone who knew both what OS/2 was and that IBM was actually still selling it. The prices I finally got for both WSEB and the Lotus SS upgrade (after one week of waiting), were dismally high, considering both were upgrades to original products. I got better prices on-line....
I guess the reason I sent you this story is to support what a number of writers have already stated: IBM's lower end employees, the ones who meet the public, are already certain (brainwashed) that OS/2's death is a done deal. Furthermore IBM's pricing on even upgrade items is so high that it is almost certainly easier to change OS's than perform an simple upgrade.
It is a disturbing trend noted by almost all users of this OS!
So whither IBM? There is no doubt that before the problems of the late eighties, IBM was a wealth creator and a growth stock. However, when Mr. Gerstner was brought in, he saw a company whose resources could no longer be supported by its income. There are two approaches to this problem: cut resource to match income generation capability or develop new products to occupy the excess resource. Like most company doctors, Mr. Gerstner chose the first option and did an excellent job - but I believe all the benefit from this activity is now fully reflected in the stock price. Following this reconstruction, however, there continues to be the necessity of competing in the IT marketplace as it develops and of providing customers with the products they wish to buy.
In terms of moving IBM forward, what Mr Gerstner has principally done is to expand activities which were in place when he arrived - enhancing mainframe systems, enhancing mid-range systems and adding more services. What he hasn't successfully done is come up with innovative products in that part of the IT marketplace which is accounting for an ever increasing proportion of business IT spend: a marketplace which revolves around the desktop and its associated architectures and communications systems. As a consequence of this, the IBM stock price has spent the last year prosaically tracking the Dow and stands on an undemanding P/E ratio in the 20s, whilst the technology sector is booming. Even quality companies are commanding multiples more than twice this: look, for example, at how Microsoft, a strong competitor in this marketplace, is rated! What this means is that IBM's failure to compete successfully for client/LAN/server/internet business is costing every stockholder at least $100 in the share price. The corollary, however, is that there is tremendous upside potential if IBM were to compete for the money being spent in and around the desktop.
If IBM does not attack this marketplace, then the stock will probably gradually be re-rated into an income stock. Whether or not IBM remains a player in the wealth creation process could well, therefore, be in the hands of its institutional investors. These will either bring external pressure on the board to do something or they will quietly advise their clients to view the IBM Corporation in a different light - as an income stock which can only be expected to grow its capital value more or less in line with the market.
The $64 question therefore, is whether the jury is still out or whether attitudes have already begun to change.
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