System for Sale Versus Service for Rent

November 16, 2009 Timothy Prickett Morgan

Like many of you out there in IT Land, I am not a member of the Digerati. A long, long time ago–about the time I got married and had better things to do with my money–I stopped being on the cutting edge of personal technology and I started going wicked conservative when it came to my PC, laptop, cell phone, and other gadgetry. This is a theme that will be familiar to many AS/400 shops, particularly those whose machines are paid for and are doing their work, 24×7, without any fuss. If it works, don’t spend money.

It is getting close to Thanksgiving, and this essay has a point even if it will ramble on a bit like Alice’s Restaurant. I ask you to bear with me. (I’m not tired. Or proud. . . .)

Running my own business has also taught me to be a lot more conservative about technology, too. Although I will say that paying a premium for a good server that you can trust–rather than building servers yourself, as I have done–now makes a lot more sense to me than shelling out cash did a few years back. It is easy to get lost in the weeds when you get involved with designing, building, and supporting your own servers and the applications that run atop them. I have been in the weeds way over my head more than once, and I find this very uncomfortable–even if it is a good (and I think healthy) intellectual challenge for a tech journalist to be in. Running a baby data center taught me things about system administration, security, and power efficiency that would have merely been abstract concepts to me.

One lesson is to respect what that IT departments of the world do for a living. Serving up static HTML pages with some pseudo-dynamic elements and sending out email newsletters is a fairly simple IT job. Complex enterprise resource planning, supply chain management, and customer relationship management are difficult to support, and keeping the n-tier hardware architectures tuned and balanced is no mean feat. Layering on security, compliance, virtual private networking, and mobile computing layers takes a lot of smarts to make it all work properly, and integrating with the increasingly diverse online applications (like Salesforce.com) and now cloud computing takes some smarts.

Suffice it to say that I have a lot of respect for what IT experts do, and I have relied on a few of my own over the years to make IT Jungle possible. And I know that in your data centers and on your corporate desktops (and mobile computing devices of a zillion styles), your job is so much more complex than two decades ago when it entailed buying an AS/400 with its integrated database and RPG compilers and slapping on an MRP II system to run a factory floor and then integrating the MRP system to the accounting and inventory systems. That was easy.

While I am no tech luddite, I have been a cheapskate and I have been as resistant to change as many IT shops can be, particularly in a down economy. But as conditions in my life have changed, the way I want to compute–and where–has changed to. And I think many i shops are facing similar transitions, particularly with the economy being sluggish. We want to do things better as well as cheaper. But change is annoying and risky.

For me, the break point came when my Verizon DSL Internet service started going whacky in mid-October. If I don’t have Internet in my office, I can’t work. It is even worse that that–if I don’t have the Internet to see what I have written in the past about a topic and what other people might have said about a topic, I can’t even think properly anymore. Something in the way I do my work (probably because of the sheer volume of stuff I have written) has changed over the past decade. When people ask me what I do for a living, I sometimes joke that I work for the Internet, that what I do helps the people who do IT do it a little bit better, and they all work for the Internet, too. We serve the Internet’s needs as much as it serves ours. Even more importantly, the Internet is my extended memory. In 20 years of tech journalism, there is just too much that I have covered to remember it all, and the advent of Google has only made my reliance on the Internet for precise details even more acute. I used to remember damned near every IBM product line and most of the major features, in my head. Not anymore, as Inspector Clouseau would say with his cheesy (well, fromagey) French accent.

So when my DSL went offline and Time Warner was unable to get RoadRunner cable service installed in my office tout suite, I had to resort to my old AT&T Worldnet dialup account to log into the Internet and therefore do my work. This was a very unsatisfactory experience, particularly with Webcasts, WebEx presentations, and large files being a part of my day-to-day life. But I got through and made it work. Then last Friday, something in me snapped, and I suddenly wanted new technology. I wanted handheld and mobile computers that could connect to both WiFi and 3G networks so I would never be left high and dry again, and more importantly, so my computing could reflect my more mobile lifestyle.

I am simply not chained to my desk as much as I used to be, and I need to take my work with me. My kids are at that age (Ellie is 10 and Hank is 8) when they are doing a zillion things, and with my wife, Elizabeth, working down near Wall Street, I am the soccer dad on weekdays while she does the running around on weekends while I work and make beer and various other concoctions. The kids play soccer, are on the swim team, do Taekwondo, and other activities where I am often sitting for an hour or two where I need to be working in the late afternoon or early evening.

I started to think about joining the modern handheld computing age when my 5-year-old phone lost its screen (but still worked as a phone). And for the kids’ birthdays over the summer, after Hank put his iPod Nano through the wash, I decided to get them each iPod Touch handhelds so they would each be able to watch movies in the car on long trips and not fight over what might be playing on a portable DVD player. (Which cost as much as one iPod touch for a decent one.) The kids went nuts for these things. And I found myself grabbing one of them when I was in the house to check on college football scores while watching a movie with the wife or reading something online–the Apple software is surprisingly good and intuitive, although I still haven’t learned to text message at any speed. (I can type faster than most people with a full-sized keyboard, but my fingers find these small keyboards baffling at the moment.)

I caught the bug. I started talking to all my friends who are members of the digerati about the phones and handhelds they use, and I got a lot of input that lead me to the Apple iPhone, which had just gotten a lot cheaper over the summer. One night when we were out at dinner in Manhattan (trust me, that is extremely rare because who can justify the restaurant and movie and babysitting and cab costs), we walked past the Apple Store in the ritzy SoHo district–where I used to work with Hesh Wiener, as it turns out, as one of his cub reporters–that used to be the SoHo post office. My wife needed a new phone, so I told her she should go in and get an iPhone. She did, and she loves it.

I held back with my trusty and damned near rusty LG phone. I hadn’t lost my Internet in the office yet. But I played around with her iPhone, and thought it was pretty slick. You can actually do things with this tiny device. (Yeah, I know, this is obvious, but not until you really see it does it make sense.)

Once my Internet was on the fritz, that was it for me. I was ready to do something and change the way I compute. I have no great love of the old New York Telephone–now known as Verizon as it absorbed a bunch of other telcos Borg-style–but I have to say, the Verizon 3G network really does the job when I am traveling, and I have heard complaints about the AT&T network that has an exclusive deal with Apple for the iPhone. So on Friday afternoon, on a spur of the moment, I became one of the first customers in New York for a Motorola Droid phone using the Android Linux variant and offering a pretty compelling alternative to the AT&T-iPhone combo. Open versus closed platform? It wasn’t a huge issue for me, since I have no great love of either Apple or Google. My decision was based on the network and a belief that, in the end, Android will have as many apps as iPhones do. (The ratio is 10,000 to 85,000 right now.)

And while I was waiting for Verizon Wireless to activate the new phone and put my old LG out of commission, I walked over to the Hewlett-Packard Mini 311-1037NR running the new Windows 7 operating system, played around with it for a bit, and then told my sales rep to give me one of these puppies, too.

In my other life as a journalist at The Register, I have actually been covering HP’s fall PC lineup and got to play around with this Mini 311 a week before they were launched in mid-September for shipments concurrent with the launch of Windows 7 on October 22. I have a very respectable but old and heavy laptop that I use as my desktop machine, and this week as you are reading this, I am actually at the Supercomputing 09 show in Portland, Oregon. I needed a new, lighter machine for when I am at press conferences and trade shows, and this Mini 311 comes not only with WiFi, but also gets its own cell phone number and lets me use the Verizon 3G network. Basically, now I can work wherever there is a WiFi or cell network.

I am not sure if this is a good thing, mind you, but I know that it is a necessary thing. With two jobs and two kids, that is just the way it is for me.

All of that was a prelude to why I bought what I bought. The HP Mini 311 sells for $399, but with a $40 monthly contract for 3G service (which I will only use when my real Internet is on the blink or when I am at a press conference or at an airport where they gouge you for Internet connectivity), I got the machine for $200, not including a $100 rebate that I will, for once, actually send in. And for the Droid phone, which has a list price of $561, Verizon cut me a deal so I could get the phone for $250 not including a $100 rebate (which I will, again, send in) if I sign up for a two-year Internet service contract. I was thrilled to do so because this is now my new remote reading device, and it cost me only $150. Internet service for the Droid costs $30 for the email and smartphone plan and voice service costs $40. I tossed in an extra $8 a month to get insurance on the Droid, so Verizon will replace it no matter what happens. And both “computers” can be upgraded after 20 months to then-current phone and netbook technology at a substantially discounted price.

I spent $250 up front for $960 in hardware, but ponied up another $960 for 3G service for the netbook and $1,872 for the service on the Droid, which will be paid in monthly fees per my two-year contract. And I didn’t bat an eyelash because my life had changed, the hardware prices were low enough to not cause me to freak out, and the services fees only hit once a month. My Road Warrior Computing setup will cost me $158 per month, which is about 50 percent more dough than I might spend for cable TV service, but it lets me work when I need to work and wherever I need to work. What is that worth? Try living with no Internet in your office for more than three weeks and you will find out.

Which brings me back to the beloved AS/400, now the Power Systems i platform. I love the concept of an application platform–this is what made the AS/400 unique, and it is why the machine has embodied in the Power Systems lineup running the i 6.1 operating system. Twenty years ago, the hardware was so expensive that the software platform looked cheap by comparison. With the B Series launch in June 1988, OS/400 cost between $5,500 and $55,000 on B10 through B60 machines; that is a per system charge. The B machines ranged in price between $19,000 and $229,500. The operating system was roughly a fifth of the cost of a base system. That is not the case today. IBM’s base hardware prices have gone down some (and a lot if you adjust for inflation), but the company is charging roughly the same prices for i/OS per core on systems with anywhere from 2 to 64 cores. Adjust for inflation, and the software has gotten wickedly more expensive and the hardware has not kept pace with Moore’s Law.

Small wonder IBM doesn’t want to even try to market the i platform. It’s got the pricing pitch all backward.

We all know the i platform has some pretty substantial advantages for running back-end systems, particularly for shops that have a lot of investments in RPG and COBOL applications. I believe that companies will spend lots of money to enhance and extend these applications, if and only if there is some advantage that can be brought to bear. Once you have identified that advantage, then the trick is to make the price more palatable by chopping it up and selling it as a monthly service.

The Smart Business i platforms are, in this regard, a step in the right direction. There is an appliance with an integrated online support for both the device and applications that are sold and certified to be distributed through an online marketplace. But the sticker price on the Smart Cube i systems are still giving people sticker shock because vendors want all the money up front. And the boxes are limited to a fairly tiny system. Forget that. If I had to pay all of that dough for my Droid and Mini 311 devices and their Internet services up front, or waited for a bank and the CFO to come through with a lease or some other financing, I would have never even went to the Verizon store to upgrade my phone, much less signed up for a Mini. Because the costs were perceived to be low, I radically changed the way I do computing in less than 20 minutes. And I made my work situation better at a time when I really, really do not want to spend money.

I am, metaphorically speaking, the quintessential AS/400 shop that has not upgraded for five generations of iSeries, System i, and Power Systems i technology. I think the Power Systems people need to learn a little more from the iPhone and the Droid and the wireless netbook than just to have an application store. Study the economics, look at how the sell works, and revive this i business. Get cheapskates and luddites to spend money, but give them a lot in return so they will actually do it.

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