Looking to Run Your Computer, or Your Business?

The hugely successful AS/400 system -- over 400,000 units installed as of late 1996, each ranging in price from $15,000 to $75,000 -- turned out to be a cash cow for IBM from day one of its release (in June 1988). IBM achieved its 12-month European sales target of 13,000 AS/400 machines in just 60 days, and 25,000 units were sold in the US in four months.

The one exception in IBM's leadership position is Japan. Here, the AS/400 must fight it out with ofucon (office computer) systems from the likes of Fujitsu, NEC, and Toshiba. Japan's domestic ofucon systems offer the same turnkey solutions (described below) that have made the AS/400 a winner.

A legacy for the future
Today, IBM is transforming the AS/400 into a 64-bit PowerPC RISC-based client/server system, and hopes to exploit new markets like intranets and groupware. Nevertheless, in this era of open computing, with paradigm upheavals and Wintel power marching into the mid-range sector, why would businesses continue to invest in what is, after all, still a proprietary platform haunted by at least the ghost of a legacy system history?

"Because there is a bunch of people out there who care about running their businesses, not their computers," says Denise Buonaiuto, general manager of IBM's AS/400 business in the Asia-Pacific and probably the nearest thing to an evangelist IBM has produced. "They want to roll the computer in the door and start working. You can do that with the AS/400, so customers keep voting with their dollars."

True, Unix and Windows NT systems offer a company more computing flexibility and the freedom to pick and choose between vendors and technologies. And that's great -- if you can afford to employ a small army of Information Systems (IS) specialists to hack everything together. But many small and medium-size businesses don't have such resources. They need a powerful system that is installation- and maintenance-friendly. For these companies, the AS/400 (like its Japanese ofucon competitors) offers a rich, customizable package with one-stop shopping that will meet most needs, most of the time.

Simplifying complexity
It's the difference, says Buonaiuto, between a creative photographer putting together a complex system of cameras, lenses, filters, and lighting aids to cover all contingencies, and the photo enthusiast who is productive from day one with a convenient auto-focus camera that incorporates a zoom lens and flash.

IS people know there's more to it than that, of course. "The AS/400 is just as complex as other systems, but IBM is able to hide it behind a package," says Colin McCabe, an IS manager with Credit Suisse in Tokyo. "But you should see the documentation. It's phenomenal!"

Significantly, 1996 market research reports from the Datapro Information Services Group and The Aberdeen Group reveal that many IS people in the US do regard the AS/400 as being relatively easier to operate and maintain than competing systems. And if simplicity isn't enough, reliability certainly is. "The applications running on the AS/400 are very strong and solid," says McCabe, "because the system is very strong and solid. It's been around a long time. Basically, you can keep all your important stuff -- your core applications -- on the AS/400."

Staying competitive
Can a system that's been around since the '80s continue to compete as we head towards 2000 -- especially now that Microsoft is targeting the AS/400's traditional markets with its Windows NT? If operating costs have anything to do with it, the AS/400 has no worries. A recent IDC (International Data Corporation) study comparing Windows NT, Santa Cruz Operation's Unix, Novell's NetWare, and AS/400 systems employed in very small companies (1 to 30 users) in the US showed the AS/400 to be most competitive overall in long-term ownership costs.

Likewise, the other market researchers noted above found many positives that come with age: a mature system offering unmatched reliability; convenient integration of the operating system, database software, and middleware; and a high level of security with rich, easy-to-use management and support tools.

IBM's Buonaiuto even finds a silver lining in Japan's current Windows NT boom. With IDC Japan forecasting an installed Windows NT base of over 2 million by the end of 1997, she sees new opportunities opening up in the Japanese market for the AS/400 as Japanese ofucon vendors scramble to ride the NT bandwagon and divert their resources to machines for the Microsoft system.

As long as IBM doesn't let the appeal of packaged, one-stop shopping get trampled in the stampede to Windows NT, the AS/400 should still be winning over customers who care more about running their businesses than computers, in 2001.

Freelance writer John Boyd is the Tokyo correspondent for InformationWeek and writes the long-running weekly Computer Corner column in the Japan Times. You can contact him at 6840615@mcimail.com.