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IBM reorganizes System i into two new business units

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IBM has reorganized its System i product and management team into two new organizations, the Business Systems unit, and the Power Systems unit. The company stated that its System i business has split into two distinct client segments—large enterprise and small and medium business—each with its own set of requirements, and that it is undertaking this reorganization to better address the needs of the two communities.

The new Business Systems unit will be led by Marc Dupaquier, and will be responsible for SMB integrated systems including the low-end System i products and will focus on the SMB client segment. This new unit will work toward extending the System i capabilities to ensure continued relevance to small and medium businesses and will build on the integrated, easy-to-use value proposition of i5/OS.

The enterprise-focused Power Systems unit will be led by Ross Mauri, and will include all of the existing System p product line as well as the high-end System i 570 and 595 products. This unit will be focused on delivering leadership for POWER-based systems, including the value of the i5/OS operating environment and applications for larger enterprise clients.

In addition, the company indicated that nearly half of its systems customers have i5/OS installed in their organization and that it believes the reorganization will help secure the investments that customers and partners have made in i5/OS applications by keeping i5/OS in the mainstream of IBM's future systems investments.

To the System i faithful, this announcement will likely be subject to considerable scrutiny and reexamination, in a fervent attempt to ascertain whether indeed the sky is falling. While organizational realignment is generally just a fact of corporate life, in the case of the System i, it is a closely watched and debated affair. To our way of thinking, the System i was overdue for some kind of change given the platform's overall market performance as of late.

This is not to lay blame on the platform, but rather acknowledge the marketplace reality that the customer base has bifurcated into two separate and rather different camps. As such, the historic marketing approach for the platform was no longer in alignment with market realities and stymied attempts to grow the customer base. With this announcement, we do not see a diminishing role for the System i going forward, but rather the potential for the opposite, as the two customer constituencies can be now addressed in a more focused and relevant manner.

IBM's assertion that it wants to broaden the number of platforms where i5/OS reside makes a great deal of sense to us. From a hardware perspective there is scant difference between the System p and System i; the OS and application support is what truly differentiates the System i.

Bringing i5/OS to more platforms is not a harbinger of the death of the System i, but rather a reflection of the importance of the software stack to IBM, its ecosystem, and the customer base. If Big Blue was considering eliminating the System i, it could have simply relegated i5/OS as an option to the models 570 and 595 where its margins are considerably higher, and leave the lower end of the market with a migration decision. This is not evident in the reorganization announcement.

Although one could postulate on the potential for this to happen in the future, the future is not yet written and the forces that shape the future are the decisions taken today.

Therefore, it behooves all of us with an interest in this unique platform to accept that IBM is taking action with the hope of growing, not burying, the System i, and act and think accordingly. Inaction on the part of Big Blue would have led to only one possible outcome, and that outcome would have been far more onerous than learning to adapt to the changing waters of the marketplace.

Copyright © 2007, The Sageza Group

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