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- Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU
- Subject: (no subject given)
- Path: sparky!uunet!stanford.edu!bcm!convex!darwin.sura.net!paladin.american.edu!auvm!RHQVM21.VNET.IBM.COM!FDDWYER
- Message-ID: <IBM-HESC%92111110014086@PSUORVM.CC.PDX.EDU>
- Newsgroups: bit.listserv.ibm-hesc
- Date: Wed, 11 Nov 1992 12:38:43 EST
- Sender: "IBM Higher Education Consortium" <IBM-HESC@PSUORVM.BITNET>
- From: Fred Dwyer <FDDWYER@RHQVM21.VNET.IBM.COM>
- Comments: To: IBM-HESC%PSUORVM.BITNET@CORNELLC.cit.cornell.edu
- Lines: 114
-
- 'MSG From: SMTP --IINUS1 To: FDDWYER --RHQVM21 11/11/92 01:00:20a
- =========================================================================
- >From: Jerry Bryan <BRYAN@WVNVM.WVNET.EDU>
- >In article <IBM-HESC%92111007375701@PSUORVM.CC.PDX.EDU>, Fred Dwyer
- ><FDDWYER@RHQVM21.VNET.IBM.COM> says:
- > We believe that
- >>if anything, HESC pricing needs more granularity, not less.
- >
- >Hmm. This can quickly become a religious issue, and I can easily
- >argue either side of the question. This is not necessarily my
- >installation's position, not even my own, but let me play devil's
- >advocate just for a moment.
-
- I AM RELUCTANT TO BECOME INVOLVED WITH THE DEVIL BUT CANNOT RESIST
- THE TEMPTATION TO CLARIFY A FEW POINTS. PLEASE SEE MY COMMENTS
- INTERSPERSED BELOW. FRED DWYER
- >
- >It seems to me that the HESC is getting far away from its original
- >"look and feel", and is becoming simply a large educational discount.
- >In its original incarnation, the HESC served (at least) two purposes:
- >1) for software an installation would have run anyway, it made the
- >software less expensive, and 2) it allowed an installation to run
- >software it would not otherwise have run. In either case, the
- >advantages to the installation were more and better software at less
- >cost, and for IBM more use of IBM hardware and software, with
- >attendant current revenue (but see below) and potential
- >future revenue due to faculty and students trained on IBM hardware
- >and software.
- >
- NOT A BAD CHARACTERIZATION, AND NOT NECESSARILY DIFFERENT TODAY.
-
- >Regrettably, IBM views the HESC as a net loss with respect to current
- >revenue. This point of view totally ignores my item #2 above, and
- >ignores the hardware revenue associated with both my item #1 and item #2
- >above. I believe that IBM should evaluate the HESC in terms of future
- >revenue, and also in terms of current revenue, where the absence of the
- >HESC would result in loss of current hardware revenue and loss of
- >HESC software revenue for software that otherwise would not be run at
- >all.
-
- IBM DOES NOT ASSUME THAT ALL, OR EVEN MOST, OF THE HESC LICENSES WOULD
- EXIST UNDER STANDARD TERMS AND CONDITIONS IF HESC WERE NOT IN PLACE. IF
- THAT WERE OUR ASSUMPTION, THE HESC WOULD NOT EXIST. WHILE THE
- JUSTIFICATION FOR HESC CERTAINLY CONSIDERS ALL OF YOUR POINTS (ABOVE),
- WITHIN THE LAWS OF OUR LAND, IT IS NECESSARY FOR EACH PRODUCT TO STAND
- ON ITS OWN. FINANCIALLY HESC MUST BE SELF SUPPORTING. THIS HAS BEEN
- TRUE FOR HESC SINCE INCEPTION. YES, IT IS TRUE THAT YOUR LOCAL
- DISCOUNT STORE MAY OFFER "LOSS-LEADERS" BUT THAT IS A VERY DIFFERENT
- ENVIRONMENT, A VERY DIFFERENT LEGAL EXPOSURE.
-
- >As I understand it, IBM product managers assume (quite incorrectly
- >in my opinion) that without the HESC, they would get all the revenue
- >for all the HESC products. My opinion is that without the HESC, virtually
- >no installation would run what you might call "marginal products"
- >(my item #2), and that virtually every installation would be involved
- >in even more consideration of downsizing than they are already doing,
- >and would be getting rid of software even in my category #1.
-
- MOST IBM PRODUCT MANAGERS SUPPORT HESC. THAT IS HOW 700+ PRODUCTS
- HAVE COME TO THE HESC OFFERING. IN A VERY FEW INSTANCES PRODUCT MANAGERS
- HAVE DECLINED HESC LISTING.
- >
- >What all of this has to do with granularity is that the courser the
- >granularity, the less association there is between the cost to the
- >installation for the HESC and the amount of software which is run.
- >With such cost insensitivity, there is more incentive for installations
- >to run IBM software and hardware, and less incentive to downsize to
- >(possibly) non-IBM hardware and software. The customers get more
- >software for less money, and IBM has more customers and more revenue.
- >This is a win-win situation if ever I saw one. Therefore, I argue
- >(for today, at least) to return the HESC to its roots, and to provide
- >courser granularity, not finer.
-
- THE GRANULARITY ISSUE IS SIMPLY A QUESTION OF HOW WELL MEMBERS CAN
- MATCH THEIR COSTS TO THEIR PRODUCT REQUIREMENTS. IF THE MEMBERSHIP
- IS WILLING, IBM WOULD PROBABLY BE HAPPY TO MAKE HESC INTO A SINGLE
- GROUP FOR $160,000 PER YEAR. REDUCED GRANULARITY, EACH MEMBER INCENTED
- TO TRY SOFTWARE HE/SHE MIGHT NOT OTHERWISE ORDER, BUT MEMBERS WOULD NOT
- GET MORE FOR LESS. EACH ADDITIONAL PACKAGE ORDERED WOULD REPRESENT
- ADDITIONAL COST TO IBM AND WOULD BECOME A PART OF THE GROUP FEE (IT
- WOULD GO UP). IN FACT, BASED ON THAT ASSUMPTION (THAT THIS WOULD
- STIMULATE ADDITIONAL SOFTWARE ORDERS) WE WOULD HAVE TO FORECAST THE
- GROWTH AND PRICE FOR IT AT THE START OF THE "ONE-GROUP-HESC" OFFERING.
- THE SUM OF PRESENT GROUP FEES ($160,000) WOULD NOT BE ENOUGH. PLEASE
- UNDERSTAND, THE HESC IS NOT A GRANT OR ANY FORM OF GIVE-AWAY, IT IS
- A PROGRAM UNDER WHICH WE LICENSE PRODUCTS AT WHAT WE VIEW (FOR MANY
- REASONS) TO BE A ROCK-BOTTOM PRICE. THIS HAS NOT CHANGED. HESC IS
- TRUE TO ITS ROOTS.
- FRED DWYER
- IBM ACIS
-
-
- ========================================================================
-
- >From: "William C Spears, Jr" <CAWCS%LATECH.BITNET@pucc.Princeton.EDU>
- >In response to Jerry Bryan's comments / HESC / granularity --- it seems
- >that IBM may be moving in the direction that we thought would happen in
- >the beginning, that is get us use to using the additional software and
- >then simply "pull the plug" although the warning was up front as defined
- >by the original rules when joing HESC!!
- -----------------------------------
- We are very distressed by your perception. All I can do is assure you
- that IBM continues to support the HESC. We are in no way ready to
- "pull the plug." As a matter of fact, today's HESC offering provides
- to members more security than the original offering. Now you may retain,
- by continuing to pay the group fees, HESC licenses for IBM withdrawn
- products, as long as those products are of value to you. Further,
- although not contractually committed, we have instituted a practice
- of not withdrawing products from HESC until they are withdrawn from
- marketing. While we cannot assure that such unique HESC withdrawals
- will never happen, we have successfully avoided any such withdrawals
- for more than 2 years.
- Fred Dwyer
- IBM ACIS
-