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Learn your Big Blue lessons

You could learn some lessons from Big Blue and its System/38 minicomputers from the late 1970s - and their kickers, the AS/400s from the late 1980s. Cisco Systems certainly is learning this with its "California" Unified Computing System, but Cisco still doesn't quite get it, just like DEC didn't with the VAX and Hewlett-Packard (sort of) got with the HP 3000 minis.

But you also have to avoid repeating some of the mistakes these machines embodied, mistakes that lead to the decline of proprietary minis and the Unix boxes that followed them to market. They've largely been replaced by Windows and sometimes Linux for new applications. (Legacy Unix apps are doing relatively OK out there because companies are loathe to change platforms when something is working. Changing platforms to save a little money can cost a lot of money and a huge amount of hassle. So there's no point).

The first lesson is that integration means a system. Moon Macrosystems is selling systems, not servers, not storage arrays. Systems, when constructed properly, can deliver a lower total cost of operation. Ease-of-use matters, but you can't rip the tits off the cash cow, like IBM has done with the AS/400 by overcharging for integration and overplaying its hand on legacy lock-in.

Moreover, integrating software components does not mean selling the whole stack as one giant hairball of code. The Lunaris stack has to be licensed so any component can be turned on or off at will - on a physical or virtual machine - and customers must only pay for what they use. Find a pricing model that makes sense. You might price software by memory usage per month and leaving it at that, getting around the whole physical-virtual divide and using that pricing to differentiate the stack in the market. Get that annuity revenue stream that IBM is bragging about all the time.

Integration also means lower cost of support, as Ellison pointed out during the Sun acquisition announcement. But that lower cost of support only happens if you integrate and simplify the stack. Moon Macrosystems will support its own stack, which can run any Java, C++, C#, PHP, or Fortran application. That is enough of an addressable market. Honest. If customers want to run other databases or middleware or application development tools on the box, you will charge extra for this support.

The trick is to simplify the support enough on the integrated stack that you can charge a lot less dough for it. And while you're at it, get the good people at Sun who know how to do this support. This is not a deal you can outsource to Asia. You need the best of the best. Leave Larry the rest. You need automated support, something like the Lunaris Network, and an application exchange, like the Lunaris Exchange. You can start by merging Blastwave, the open source community for apps compiled for Solaris, into Loonaris.org.

The other lesson to learn from the venerable AS/400 - one that DEC and HP managers didn't get about their own minis and a lesson that Big Blue, to its chagrin, eventually forgot - is that an integrated system is not about itself. It's about the applications that run atop it. You make the system invisible, easy, beloved, reliable, and you get as many real-world, enterprise-class applications as possible on the machine and you help software houses make money by helping them push complete, turnkey systems to customers who are sick of thinking about computers.

At its peak in 1998, the AS/400 had 275,000 largely happy customers worldwide, served by some 8,000 software houses that had over 20,000 applications and drove some $5bn in server and storage sales for Big Blue. A decade later, the AS/400 is under $1bn in sales, and there are maybe 2,500 software developers on the platform and maybe 5,000 applications.

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