Rumors flew around the iSeries community last week when it learned that Peter Bingaman, Vice President of IBM for the iSeries server line, was leaving IBM for a position with the LexisNexis Group. The LexisNexis Group provides information to legal, corporate, government, and academic markets and publishes legal, tax, and regulatory information via online, hardcopy print, and CD-ROM formats. As of Bingaman's last day of work for IBM on Wednesday, January 18, 2006, no replacement for the position had been formally announced by IBM.
Fast and Furious Changes in 2005
Bingaman took over the top marketing spot for iSeries in November of 2004 and quickly won support from the iSeries community by implementing a series of TV ads promoting the iSeries—something for which iSeries partisans had been clamoring for years. Critics saw these ads and other new marketing tactics as an indication that IBM was serious about turning the fortunes of the iSeries platform.
That newly minted commitment to aggressive marketing, combined with substantial deals on hardware and reinvigorated Business Partner commitments from iSeries software vendors, allowed the platform to gain steady growth in 2005 after losing substantial momentum over the previous five years.
Traditional Slump or Not Enough?
However, iSeries orders petered out in the fourth quarter of last year with an estimated 18% decline. Why would the iSeries lose momentum so quickly? Did the technology suddenly become less attractive? Did customers get their fill of the iSeries platform?
Many analysts point out that the iSeries customer is a somewhat unique animal, with highly honed buying habits. While customers from other, larger organizations try to "spend out" their budgets at the end of the year, iSeries customers traditionally have already committed the majority of their planned hardware dollars by the middle of the third quarter. And because IBM traditionally releases new iSeries hardware within the first two quarters of each year, these same wily IT managers often prefer to wait out the last fiscal quarter before placing their orders. It seems they believe they'll get more bang for their buck after IBM announces the new hardware offerings.
What's not clear in Bingaman's resignation is whether this traditional year-end downturn of iSeries fortunes had anything to do with his decision to leave IBM. Regardless, both IBM Business Partners and iSeries customers will be saddened to see him leave. His energy, focus, and customer acumen was of great benefit to the platform.
Proof of iSeries Market Potential
And, indeed, Bingaman's success with iSeries should prove beyond a shadow of a doubt that if IBM puts its marketing money in the right space, the iSeries has an enthusiastic cadre of potential new customers. In fact, IBM says that the platform gained over 2,500 new customers in FY 2005. Bingaman's campaigns—along with supporting ISVs, Business Partners, and resellers—have created new opportunities to bring the benefits of an integrated software/hardware platform to the growing niche market of potential iSeries customers.
Future Marketing Directions for iSeries
What's not yet clear at this writing is how these campaigns will be extended and enhanced in 2006. Overall, IBM's Q4 revenues took a nose dive, down 12% to $24.4 billion. Yet IBM's overall profits were up by nearly 19% to $3.2 billion. This substantial reduction in revenue is not a result of iSeries performance but is almost completely accounted for by IBM's sale of its PC business to Lenovo last spring. The remaining 1% slip in revenues is, analysts believe, due to the strengthening of the dollar against other currencies.
As IBM chooses its new iSeries marketing leader, the biggest challenge may be overcoming the traditional buying patterns of iSeries customers in order to provide predictable growth, quarter to quarter, throughout the year. Without smoothing out these buying patterns, iSeries sales spurts may continue to look more like "flash in the pan" magic than true market growth.
Thomas M. Stockwell is Editor in Chief of MC Press Online.
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