Like any commercial organization, IBM has products and services of all sorts: good ones, bad ones, profitable ones, loss leaders, and yes, horrendous mistakes wasting millions of dollars. No one doubts that IBM should continue to sell a mixture of products and services, but many have doubts about the company’s priorities. Is IBM making a horrendous strategic mistake by not pushing the iSeries into a dominant position?

We know that the iSeries/400 offers some superior capabilities. However, judging from my previous experience as an IBM product manager , few people within the company ever win a worthwhile strategic argument based on technical superiority alone. But when one makes a business case that directly affects the ongoing revenues and profits of the corporation, senior IBMers do tend to listen.

In the opening of Frank Soltis’ book Inside the AS/400, Mr. Soltis states:

The staying power of any computer system and its ability to protect the investment of its customers is still the most important consideration when you purchase a business computer. The reason the AS/400 is the most successful multi-user business computer ever made is that it meets the needs of businesses, and it has staying power.

The beauty of the AS/400 is its ability to seamlessly incorporate new technologies, both hardware and software.... The system can literally re-invent itself every couple of
years.... This [versatile] characteristic also keeps the AS/400 perpetually youthful; it does
not age, as conventional system designs do....

IBM’s iSeries customers have been saying these things for over 20 years now, and we know that the product design is viable and will expand for at least another 20 years. So will IBM kill this golden goose by neglect, or will the company use it to dominate the constantly evolving computer industry? Its competitors will eat IBM’s lunch if IBM doesn’t focus right now on the underlying reasons why some of its customers love the company’s products.

When Soltis created the basis for the AS/400 nearly 25 years ago, it was not so much a computer but a design that would meet changing business customer requirements at minimum cost and effort for many decades. That is, actually, an understatement of the AS/400’s capability. Apart from pouring billions of dollars of regular profitable revenue into IBM coffers while sparing significant marketing costs, the design minimized IBM’s internal development costs for an extended period.

AS/400 customers and industry analysts recognize that the service provided by IBM to its customers is a huge factor in efficiency and AS/400 customers’ service to their customers in the last 20 years. Now that’s what most companies call a successful product!

When one considers the business agility needed in today’s Internet world—where a Web project year is defined as around three months—how can any organization keep up without an integrated, secure, and scalable machine at its heart? Knowledgeable customers recognize that IBM’s greatest potential in e-business is based around the iSeries/400. The question is, why do they think that? A similar question was posed to IBM management 15 years ago, and the result of the subsequent research was a dramatic change of strategy, culminating in the release of the AS/400 in 1988. This strategy succeeded—not just in terms of expanding IBM’s midrange market share, but even more importantly, in helping to save IBM’s profit line when the bottom fell out of many IBM money-spinning product ranges. History is not bunk here.

So, IBM, why not do what all businesses should do? Focus more on products and services with high customer satisfaction, future enhancement potential, lower marketing costs, and higher margins. The formula is simple: good coffee, at a low price, rapidly served, equals ongoing customer satisfaction. History and business schools will tell you that if you do this constantly over 20 years, you will dominate your marketplace. Your customers will be happier and will buy more good products and services from you. So, IBM, why not reshape your future goals and gain better market share and profit? It’s just sound business.