Alan Fargusson wrote: > I don't really want to defend IBM pricing, but gross margin > is not the same as profit. It is much more expensive per > customer to maintain software that has a small installed base > than software that has a large installed base. The number of > bugs found is only slightly less for a small installed base.
Diminishing returns in the installed user base can also be shown to come from those who abandon the platform due to spiraling expenses for the same workload. Do you want to sell a single $1 million dollar glass of lemonade or 1 million glasses of lemonade at $1.00 each? Initial sales are not where the market should be focused but on repeat customers investing in the long term. Great, you have had a technology breakthrough that increases throughput and reduces cpu consumption but it only comes as a 1000 mip box and by the way your current 10 mip system will no longer be support in one year so pay up. (Greatly exaggerated I agree) Now how are you going to keep the installed base that is processing on machines less than 1000 mips if you require them to jump all those tiers just to processes the same workload? Oh, and by the way, increasing workloads do not necessarily translate into greater profits when that increase is do to a change in technology perpetrated by the vendor. If you want to sell mainframes then the stigma of vendor induced rising overhead cost associated with a given static workload has to be banished from the pricing model. If the new release of an operating system or software product requires an increase in horsepower then give the customer a break since the vendor is requiring the change. Bill Stermer ACS - City of Anaheim
