TFH Flashback: Assault, Battery Not Included

March 17, 2008 Timothy Prickett Morgan

Note: This article was originally printed in the October 1994 edition of The Four Hundred, as IBM was readying PowerPC-based AS/400s and Hewlett-Packard already had power RISC servers in the midrange.

Military forces, espionage agencies and computer companies have something in common: They like to use code names for projects, particularly secret projects. The monikers lend mystery, dignity, and importance to a risky yet often worthwhile undertaking. For instance, IBM called its AS/400 development project Silverlake, after the giant pond north of the Mayo Clinic in downtown Rochester, Minnesota. In retrospect, this was probably a better name to borrow from local geography than that of a village a few miles to the south, called Simpson. The experts who think up the code names (and who probably use code names themselves, but not Simpson) also play games with capitalization and punctuation.

For example, there was IBM’s star-crossed AdStaR, about as unattractive a bit of typography you can find this side of a ransom note. AdStaR is a code name that should have been kept secret, but wasn’t. Hewlett-Packard has just created one of these ugly little names, too. It’s the code word for Hewlett’s new marketing campaign to storm the AS/400 base: AS/sault.

We’ve been expecting AS/sault (not the name, which is more revolting than any we could have imagined, but the idea) for some time, and so has IBM, by the way. In the spring, HP started targeting big AS/400 accounts in Europe. In mid-September, HP leaked a story to the Wall Street Journal that detailed AS/sault. In a nutshell, HP is offering 30 percent discounts on hardware to AS/400 customers who jump to an HP 9000 minicomputer. HP also set up seven support centers in the United States and across Europe to help customers make the transition from OS/400 to Unix and, more significantly, to a whole new data base management system. For customers who don’t want to port their RPG applications to either Cobol or C, eleven of the top fifteen AS/400 applications package vendors have already done the work, creating HP versions of their software suites.

The AS/sault campaign is not really anything new, but rather Hewlett-Packard’s formal, advertised launch of initiatives that have long since been underway. The big advertisement for AS/sault shows a psychic standing over one of the new black AS/400 boxes IBM just announced. “But I see no clear future here,” is the medium’s message. All the major papers, eager to demonstrate their sincere interest in HP’s intentions, contacted the usual consultants, who, like newspaper publishers, never miss a nuance when big money is being spent. All the consultants pointed out what a big threat to the AS/400 HP had suddenly become.

IBM was quick to retaliate–with its own advertising campaign, of course. “Nice Try, HP,” the first page of the ad said. It was followed by pages of text describing the AS/400 base as one of the most satisfied in the world. The ads also waxed poetic about forthcoming PowerPC machines, improved systems software, and the joys of 64-bit processing. This was the same old IBM flack we’ve all heard since 1992. But even the Wall Street Journal carried a follow-up story, this one explaining how IBM’s ad agency worked all weekend, sacrificing time they might have otherwise spent in communion with nature, perhaps watching the mosquitos breed on Silver Lake.

We sure hope IBM and HP don’t spend all their money on ads. They both ought to put a few bucks into competitive analysis. Neither company seems to understand the midrange market. And if the vendors know anything, their advertising agencies certainly don’t.

Making the jump from OS/400 to Unix is something just about every AS/400 customer doesn’t want to do. Big companies with big budgets and a lot of technical talent–particularly ones with very large, overloaded AS/400s–might think moving to an HP 9000 system is a better choice than waiting for IBM to make good on its promises. But the number of such customers is very small, only in the hundreds. While IBM wants to keep control of these accounts as a matter of pride as well as business, it will still probably lose a few customers to Hewlett.

The prime targets for HP are AS/400 customers who use third party applications software for just about everything, software that has already been ported to HP 9000s. Such companies have to move their data base files from one environment to the other (which is no simple task) but their applications will be ready for them. To end users, the programs will look essentially the same on the HP host as on an AS/400. Migration, when all you have is third party software, is probably about as arduous as making the jump from a System/36 to an AS/400. But for those who don’t use off-the-shelf programs, the jump is about as easy as moving from OS/400 to, uh, Unix.

One simple fact about the AS/400 base seems to have eluded the press: The majority of AS/400 customers write their own applications. HP can offer these customers precious little more than deep initial hardware discounts. While HP has had an RPG compiler under Unix for years, HP’s software is a far cry from IBM’s RPG/400 compiler. IBM’s RPG is tightly integrated with OS/400 and the DB2/400 relational data base management system. Cheap hardware–if you can call 30 percent off list cheap in today’s midrange market–doesn’t even come close to paying for the programming talent needed to port a full set of applications from an AS/400 to an HP box. The money saved from the discounts won’t buy new canned applications software, either. It may not even pay for the extra disks and memory the RISC-based machine will need to do the work formerly performed by a skinnier AS/400. (RISC machines like the HP 9000 typically require much more disk and memory to do work than CISC-based systems of a similar power class, such as the AS/400.) In most cases, HP could give away its hardware and still not make it cheaper for a customer to unplug an AS/400!

Pulling Punches

If HP wanted to make a direct assault on the AS/400 market, it would have to create a full OS/400 environment for the HP 9000. Universal Software has done this for the System/36’s operating system, SSP. The irony is that Open/36, Universal’s product, is taking off just in time for IBM to kill it with the new Advanced 36, which was announced on October 4 (see the story on page 4 for details). Though HP’s wildly successful printer business gives it all the money it needs to create an HP version of OS/400 from scratch, IBM has made OS/400 so big and complex that it may not be technically feasible for HP to develop an AS/9000. (That’s what we’ll call it. HP, we suppose, might call it H(As)p nInE tHOusaNd.) We know Hewlett has thought about this idea and we believe HP ultimately rejected it. HP wants to get rid of its one proprietary environment, MPE, not add another one. We should also point out that HP has had about the same luck dislodging MPE users as IBM has had moving the System/36 base to the AS/400.

Despite all this, HP is definitely a threat to the AS/400–not so much a threat to today’s installed base, but tomorrow’s. Hewlett-Packard can win a lot of business from prospective midrange users whose choice comes down to an HP 9000 or an AS/400. Right now, these shops are planning to computerize parts of their businesses that now work with paper plus a few PCs. These users have outgrown their sneakernets or PC-based LAN servers and want a bigger, more centralized and more mature kind of system. In addition, there are potential users in the mainframe world, companies that want to take advantage of the excellent applications packages and favorable costs of midrange systems. These are the customers IBM and HP will fight over, and this is definitely where HP has the upper hand today. Part of the advantage comes from HP’s clever alliances, such as its marketing deal with XL/Datacomp, formerly the biggest AS/400 reseller.

Although it can put IBM and its ad agency on the defensive, Hewlett-Packard has its share of problems, too. In particular, HP is in a little trouble with HP-UX Version 10.0, the version of its Unix software that runs on the T500s, the largest 9000 systems. Version 10.0 is already six months late, and it probably won’t be ready until the second half of 1995. (That’s apparently when everything in the computer industry–including Chicago, OS/2 for PowerPC and PowerPC for the AS/400–will be ready.) Without HP-UX 10.0, the HP 9000 line is barely better than the AS/400 Advanced Systems. This gives IBM some breathing room, competitively speaking.

What HP does have today is a line of very fast Unix systems whose software isn’t as powerful as the promised version. But HP’s 9000s provide rock-solid commercial Unix capability at a fair price. So it’s no wonder that HP’s midrange business is growing very rapidly. But it is unfortunate that IBM–despite the leap in price/performance it took with its current Advanced Series processors–feels compelled to tout not what it can deliver now, but instead the PowerPC AS/400s and their associated Unix-like software it will have next year. This is almost certainly a mistake, a sign that some of IBM’s top executives can’t tell their ads from their installed bases.

Them’s Fighting Words

In the meantime, it is clear that IBM can’t let the HP AS/sault go unchallenged. It can’t afford to mark time waiting for the PowerPC fighting machines to get into volume production; by then, HP might have something new, too. There are already signs of some tactical maneuvering. We understand that IBM will deepen the discounts it gives to resellers and increase the value of trade-ins on HP machines for the handful of HP shops that might consider migrating to an AS/400. These moves make for dramatic advertising and public relations campaigns, but they won’t affect most customers. . . unless the customers put IBM to the test.

So next time you need an extra computer or an upgrade, make sure IBM knows you think it is prudent to also consider the impressive offer made by the HP sales rep you invited to visit. IBM did say, after all, that it would meet or beat any HP offer.

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