Dean Kent writes:
>Please forgive me if I misunderstand, but what does "buying software
>companies" have to do with "expanding the mainframe market", which is what
I
>thought the gist of this discussion was about?
In the direct sense, nothing. Buying software companies (first order
effect) has nothing to do with expanding the mainframe market.
But I replied to Steve Comstock's comment: "It seems to me that IBM has
pretty clearly shown their only long term interest in z is to run Linux
there." You shouldn't put quotes around a phrase (expanding the mainframe
market) that wasn't used in previous messages then object when someone
doesn't reply to the phantom phrase. :-)
Yes, I agree with your statement that "peanut butter and jam" make a good
sandwich. :-)
>If IBM wishes to be the
>sole (or main) provider of all mainframe software solutions, that's one
>thing. If IBM wishes to have a dynamic and growing mainframe market, that
>is quite another. The words being spoken and the actions being taken
don't
>always seem to be in sync, which is why there are those who question them.
OK, moving on to the separate issue you raise. It's an excellent question.
As said, to a first order effect, IBM buying Candle (for example) did not
expand the mainframe market. And what I think you mean is expanding the
number of products in the mainframe market. The day before the acquisition
there were X number of Candle products, and the day after there were still
X number of the same products, so no change.
But that's not the whole story by any means. There are at least three
strategies when you buy out another company:
1. "Buy to bury." You buy the products to kill them.
2. "Buy to milk the cash flow." You buy the products to enjoy a stream of
revenue (acquiring annuities).
3. "Buy to grow." You buy the products to take them to the next level of
technical advancement, expanded sales channels, and/or synergies.
I posit, with ample public supporting evidence, that IBM buys software
companies then follows strategy #3 in the overwhelming majority of cases.
And that's a market expansion strategy.
Indeed, if we look at the Candle acquisition, the investments in those
products have been reinvigorated. The first thing IBM did was put more
programmers onto those products. The number of products in that line has
expanded, and the product function is dramatically improved. As just one
example, we here in Japan were waiting years (decades?) for OMEGAMON to get
full Japanese language translation, so operator panels and such would all
display in Japanese. IBM introduced that feature in October last year in
Version 4.1, along with other national languages. I think it's market
exclusive function, at least among the major monitoring products.
There are other effects. For example, another wise thing IBM did in my
opinion is to release Tivoli OMEGAMON XE for z/OS Management Console. This
product is available for download at no additional charge to anyone -- go
grab it. This serves a much larger market expansion role, in making basic
z/OS monitoring much simpler and easier especially for new z/OS operators,
including smaller cash-limited customers. An operating system that's
easier to use and easier to operate is more likely to enjoy even greater
expansion. Another great example recently is JZOS and Dovetail. After the
acquisition IBM promptly started shipping JZOS with every z/OS license, so
that every Java programmer in the world is already a mainframe batch
programmer, and every z/OS mainframe can run their code. Yes, to a first
order effect the number of z/OS products didn't change with the Dovetail
acquisition, but it's a massive change in market expansion potential.
Yet another effect is that BT/Is ("Basement Tinkerers and Inventors") who
create innovative z/OS software products might find that their young
companies are worth more. There's at least one more company, IBM,
interested in buying certain software companies. A company's buyer pays a
premium over public trading value. Said another way, in recent years the
market value of z/OS software companies has grown because there are more
potential suitors. The growth in market value of such companies is bound
to influence what sort of companies start up in the first place, because
their founders and early employees enjoy significant windfalls. These are
different acquisitions than what we've seen in the past. These are not
typically acquisitions of stable, mature companies with limited potential
for acquiring new customers (i.e. acquisition strategy #2).
IBM is not the only big fish in this ocean by any means. It's not remotely
possible for IBM to be "sole provider" of much of anything.
Yet another effect is that an expanding, competitive market encourages more
software vendors to actually get off their butts and invest in their
previously moribund "strategy #2" products. This phenomenon encourages
even more expansion.
As mentioned in the previous note, IBM has also bought software companies
that don't have z/OS products. After the acquisition, pretty soon IBM
brings many of those products to z/OS. The recent example I cited is
Webify, now WebSphere Business Services Fabric for z/OS. Rational is
another excellent example, with an increasing range of products on z/OS,
like one of my favorites, Rational Performance Tester. Clearly this trend
expands the mainframe market.
It's not just acquisitions, though. Business partnerships are another way
to get more products on z/OS and to expand the market opportunity for those
products, and there are many examples. Mainsoft is one notable example:
with Mainsoft and IBM, if you made the mistake of writing proprietary
Microsoft .NET applications, you can move your .NET applications to
WebSphere Application Server for z/OS (or Linux on z). Market expansion.
Good question, thanks.
- - - - -
Timothy Sipples
IBM Consulting Enterprise Software Architect
Specializing in Software Architectures Related to System z
Based in Tokyo, Serving IBM Japan and IBM Asia-Pacific
E-Mail: [EMAIL PROTECTED]
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