System i Marketeer Chats with iSociety Members

March 5, 2007 Timothy Prickett Morgan

The general manager of the System i division, Mark Shearer, hosted an online chat with the members of the iSociety System i advocacy group last month, and this month, it was Elaine Lennox’s turn. Lennox, who has been the vice president of marketing for the division for a little more than a year, gave chat listeners (readers?) a sneak peek at how IBM will be marketing the System i platform in 2007.

Not everyone has an hour to kill in the middle of the workday, so I participated on your behalf. As I go to press, iSociety has not yet posted a transcript of the chat, but I captured it with screenshots on my PC. Because iSociety is obviously interested in driving its own membership, please check its chat section first for the transcript. If you can’t find it there, you can use my more crude version of it until it is there.

I asked Lennox to describe the marketing plans and budgets for the System i line in 2007, and to contrast them with what IBM did in 2006. She did not at first provide a lot of details–marketing and sales plans are essentially trade secrets, after all–but she did say that the core themes will be to build skills at universities through the System i Academic Initiative and to help COMMON, iSociety, and other large user groups. And she hinted at another shift that seems to be under way at IBM when it comes to marketing.

“Where things will change is that IBM as a whole is going to take a more integrated approach to marketing across the company,” Lennox explained. “What I mean by this is that in 2007 we will get more help from the rest of IBM.”

This, presumably, is good news. But, then again, we all remember those Magic Box ads from the late AS/400 and early iSeries generations (1998 through 2000), which promoted IBM first and foremost and very rarely said anything specific about the AS/400 or iSeries. (Although IBM did often talk about Windows and AIX servers with a certain amount of specificity.) The campaign, which was often called the “Tragic Box” campaign by disgruntled OS/400 platform zealots, homogenized IBM servers, which were put into nearly identical black boxes and sold like different kinds of dried beans–and with about as much enthusiasm. IBM was more interested in making its marketing budget go furthest and promote IBM as a server company, and these Magic Box ads did nothing at all to differentiate the OS/400 platform and explain why it was better than the Windows, Unix, and mainframe boxes that IBM peddled under the same eServer brand.

We could argue all day and into the night about whether this approach helped or hurt IBM in the server business overall. I think that by not differentiating the AS/400, iSeries, and now the System i5 since 1998 and by not pushing the price/performance envelope as hard with these machines as IBM’s Windows and Unix servers did–as well as those of competitors–hurt the OS/400 and i5/OS platform over the long haul. Shipments and revenues of this platform are half what they were before this all started. Luckily for IBM, IBM’s Power4 processors came out in 2001, giving Big Blue a huge technology advantage over its competitors just as the server market went south. So IBM was able to gain market share in the server space without differentiating its platforms very much–and specifically without telling certain customers they really want an iSeries platform, not Windows or Unix. And since then, IBM has continued to push Unix sales, rode up the Windows wave, and has helped foster a resurgence in its mainframe base. Without having to grow its OS/400 and i5/OS platform business, and presumably still making acceptable profits across all server lines. You might think IBM would rather have a larger customer base, with each customer paying less of a premium but being happy, then have a smaller number of customers who are happy to pay a much larger premium for the benefits of the System i platform. A larger base is a safer base. But it is hard to think this way when you think about things 13 weeks at a time, as public companies do.

IBM understands that it has to get new clients on the platform, of course, and the Vertical Industry Program that it announced a month ago is the latest effort to accomplish this hard task. Simply put, the VIP effort focuses on 80 niche markets around the world where IBM and its software vendor partners think they have an advantage and where they can gain new customers. “So far we are really pleased with the initial rollout,” said Lennox in the chat. “We are expecting to get thousands of new clients onto the platform in 2007.”

What Lennox is also expecting is more help from the rest of IBM, too, when it comes to explaining the value proposition of the System i platform. But it comes at a cost–and one that some OS/400 and i5/OS zealots might see as even further homogenization.

“Traditionally, IBM has just tons of different marketing programs,” Lennox said. “And we did everything one product at a time. Going forward, we are going to have a few big marketing programs within IBM. One set will be focused on SMB clients, and the other set on large clients. There will be one IBM leader for each program, and that one leader will be responsible for making a System i target. For example, they will have responsibility to create leads for System i and new clients and new opportunities. Several of the programs are being led by Software Group. For example, there will be a large enterprise program called ’empowering people,’ which is all about collaboration–SameTime, Lotus, real-time collaboration. You will see the System i IP telephony offering promoted widely within that program. Here’s another example: In the SMB programs, you will see System i turn up all over the place. The good thing is that many more people in IBM–beyond just the System i ‘bigots,’ will now have to be responsible for the success of the System i.”

Lennox was asked how she measures the overall effectiveness of the marketing campaigns for the System i line, and once again, she did not get into specifics. “Well, we are actually pretty rigorous in how we do this in all of our marketing programs. We measure the value of sales opportunities created, as well as the number of new leads created each week and month. And then we use market intelligence to help identify new areas to go after. We also measure money spent versus return.”

It would be interesting to know exactly how much–or how little–IBM spends on System i marketing. But IBM will never say–that’s for sure. Funnily enough, with this integrated marketing approach starting in 2007 that carved the world into large customers and then everyone else, it may not even be possible for the top brass at IBM to have any sense of how the marketing dollars get carved up by platform starting this year. The thing I want to know is who is really in charge of how marketing is getting done at IBM, and why they think this strategy will work?

For years, I have this suspicion that what IBM would really like to do is brand everything “IBM” and be done with it, since those three letters are its most powerful brand. In this world, you would have an IBM System, and it would be comprised of an IBM Server (the hardware platform), plus operating systems (i5/OS, z/OS, Linux, Windows, and AIX) and then IBM Data Base (what we used to call DB2 and which should be called DB6 by now, for sure) and IBM Middleware (WebSphere) and IBM Collaborate (Lotus). You would create applications with something called IBM Program, which included Java, RPG, COBOL, C++, C#, and Fortran languages and their various runtimes–all of which were supported on the entire line of IBM Systems. And, in this IBM dream world, the IBM Server would be able to support mainframe, Power, and X64 processor boards, and mix and match them in a single system. And if you wanted to get really crazy, such an IBM Server would also support Itanium boards and run HP-UX and Sparc boards and run Solaris–and anything else that a competitor is trying to make money with. Such a product stack would be compelling to a very large number of customers–millions instead of hundreds of thousands–and would shake up the industry.

And it would therefore market itself. But, of course, I see the world through the eyes of an engineer, not a marketeer.

I want to believe that this integrated marketing effort by IBM will yield results when past efforts have not been great and results were poor. I have a hard time believing that Software Group cares all that much about i5/OS, DB2/400 and green-screen processing capacity, especially when it can just sell WebSphere and Rational on Windows and Linux and take the easy sale. I am happy to be proven wrong, of course. So go ahead, Software Group, make my day. Prove me wrong and help push System i5 sales back up to $3 billion or $4 billion a year, where they belong.

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