IBM AS/400 `Dinosaur' Evolves Quite Well

N.Y. Times News Service

Proponents of personal computers, workstations and that catch-all term for the new world order of information technology, "open systems," like to call mainframes and minicomputers dinosaurs.

But some of these denizens of computing's Jurassic era have shown a remarkable ability to evolve, and none, perhaps, as successfully as the IBM AS/400.

In today's game, the seven-year-old AS/400 would seem to have three strikes against it. It's a minicomputer. It's based not on open systems but on so-called proprietary technology. And it's made by IBM.

But according to the company's recently released financial report, AS/400 sales grew by 25 percent in the second half of 1994. Indeed, the AS/400 division was one of the few pieces of the International Business Machines Corp. whose contribution to the behemoth's recent return to profitability owed less to cost cutting than to revenue growth.

Introduced in 1988, but descended from IBM minicomputers dating to 1970, the AS/400 originally belonged to a computing approach called host/terminal.

In a host/terminal system, all data and software intelligence resided on the host mainframe or minicomputer, tethered to so-called dumb terminals that could only enter and retrieve raw data.

But last May, IBM augmented the AS/400 line with the Advanced Server Series, which is configured to work on a newer computing approach, called client/server, in which data and intelligence are distributed among large server computers and desktop client computers.

The AS/400 was able to make this Darwinian leap because of a design philosophy IBM embraced more than two decades ago. The notion was that major components of the company's minicomputers, like the central processor or the data-storage medium, could be changed without disrupting the whole system.

This ability has helped make the AS/400 the most popular multi-user computer system, with over 300,000 machines installed worldwide.

"Since 1988, the AS/400 has gone through five or six major revamps, so the only thing that is the same is the name," said Robert Djurdjevic, president of Annex Research, a Phoenix-based consulting firm. "But they have kept their eye on the ball, the ball being the AS/400 as an integrated system. They are building a system rather than building a box."

One major reason for the AS/400's success lies in its integration: the system comes complete with its own operating system, relational database, networking and security software all preloaded.

In concept, the benefits of this approach are similar to those of the Apple Macintosh personal computer, which is generally acknowledged to be cheaper and easier to use than Intel/Microsoft-based PC's because Apple does the system integration work for the user.

"By maximizing the amount of computer science that went into designing the AS/400, they minimize the amount of computer science required of the user," said Peter Burris, an analyst with the International Data Corp., a research house in Framingham, Mass.

Of course, the Macintosh and the AS/400 are "proprietary," which in the computer world is a dirty word signifying the opposite of open systems. But as with the Mac, many customers for larger systems are discovering that proprietary is not so bad a word after all, if it frees them from the burden of doing their own systems integration.

Numerous analysts' reports show that the AS/400 can be cheaper to own and operate than competing machines from open systems vendors like Sun Microsystems and Hewlett-Packard.

In addition, IBM has taken steps to make the AS/400 more open, while retaining its self-integration attributes. Toward this end, the company has incorporated many aspects of Unix _ the software operating system common to open systems _ into the AS/400's operating system, known as OS/400. That means Unix application vendors can easily write versions of their programs for the IBM system.

IBM has also adopted TCP/IP, the communications software protocol of the Internet, for easier connection to other makes of computer systems. And they've configured the AS/400 server to work with desktop clients using Windows, Macintosh, OS/2 and Unix operating systems.

"As the market has shifted to open systems and client/server we have shifted with it," said William M. Zeitler, vice president of marketing for the AS/400 division, which is managed from Somers, N.Y., with major manufacturing in Rochester, Minn. "We give the benefits the AS/400 always stood for _ simplicity, reliability, low support costs _ while accommodating client/server."

With a price range that runs from $10,000 to $1 million, the AS/400 competes with everything from PC-based servers to small mainframes. Although it has traditionally excelled in mid-range and larger systems, the shift to client/server has strengthened the low end of the product line as well, Zeitler said.

"The AS/400 comes with a database and all the software you need to run a small business," he said. "When you configure a PC server that way it gets pretty expensive."

Just as studies reveal the purchase price of a personal computer to be a small fraction of the total cost of ownership, the hardware and software in a typical client/server system amount to at most 30 percent of the cost, according to IBM.

The rest is configuration, network management, training, support and other intangible expenses. So while the purchase price may appear to be higher than competing systems, total cost of AS/400 ownership is often lower, according to IBM.

"A lot of client/server applications have turned out to be more costly and complex than people thought they would be," said Bob E. Dies, general manager of the AS/400 division. "The thing that has really helped with the AS/400 is that while it's competitive on the 30 percent piece, it gets rid of more of the 70 percent piece."

Reducing costs and complexity is a compelling argument for many potential customers. But the AS/400 is less likely to win sales to companies that believe they have substantial system integration expertise in house, or that have adopted the open-systems philosophy most thoroughly.

At least in theory, open systems allow customers to mix and match components from a multitude of vendors, thus using the power of the competitive market to gain the best performance at the lowest price.

In the AS/400 world, nearly every piece is available only from IBM, which is why initial purchase prices tend to be higher. The main exception to this rule is in software applications.

There are more than 25,000 different AS/400 programs available, most of them from vendors other than IBM. Of these, some 500 are applications originally written for Unix, which have been rewritten for the OS/400 operating system since last May.

For many customers the availability of many applications, and the ability to connect to other computer systems, makes the AS/400 open enough.

"It's easy to get caught up in the latest buzz words and lose track of what you're trying to accomplish for your business," said Terry Hucks, vice president of information services for Heilig-Meyers Furniture of Richmond, Va. Heilig-Meyers, a chain of 650 stores, has installed 550 AS/400's since last October, and intends to install 150 more.

"When you wrap all that together, the AS/400 offers better price/performance" than many other systems, he said. "We found out that `open' really didn't mean a whole lot to us."

Copyright 1995
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