I'm just guessing but 85% gross margin seems way too high. At 85%, the customers would be throwing a royal fit and the FTC would be sharpening their fangs to take another huge bite out of IBM. 15% is probably more likely. Besides, the real profit comes from software. IBM could give the hardware away and still make a huge profit on software licensing. --- On Wed 12/20, Phil Payne < [EMAIL PROTECTED] > wrote:From: Phil Payne [mailto: [EMAIL PROTECTED]: [EMAIL PROTECTED]: Thu, 21 Dec 2006 00:54:15 -0000Subject: IBM sues maker of Intel-based Mainframe clonesWith a gross margin on mainframe software around 85%, surely IBM would fall over its own feetif another supplier were to promote z/Architecture in a credible way to new accounts andexpand the zArchitecture installed base.T'ain't the way. Right from the beginning, the PCM industry concentrated on "interceptselling". Find someone about to buy an IBM box, and try and slip one of ours in under the IBMprice.In terms of real lead generation - going out and finding people who hadn't considered amainframe before - all of the PCMs were pathetic. Well, they made no effort whatsoever. Thestrategy was always to find existing IBM users and take a deal from IBM.If PSI had taken a view - with their multi-OS product - that they'd address HP-UX users andconvert them to z/OS - things might have been different. But the implication was the reverse.I'm actually at a loss to know why IBM tolerated PSI's daft little games for so long. Perhapsthey expected PSI's VCs to pull the plug and save them the trouble (and the p/r downside) of alawsuit, as happened with UMX, and were as surprised as me at the VCs' stupidity. Some VCsset new benchmarks for gullibility - one wonders if any of PSI's backers ever consulted ananalyst with current mainframe market experience to valid the basic business plan. 'Cos -IMO - even with software rights the numbers don't work. Sure looks to me like they didn't.Serves them right. PSI's monthly run rate is frightening - with no prospect of any return,ever.I still think there'll be another suit. I cannot believe thatt any VC, presented with a coldlight of day analysis of this product's prospects, would have advanced one red cent.And I also remain convinced that IBM has ultimately taken action not because of any perceivedthreat from the product, but because it's just so pissed off at the quarter by quarteruncertainty generated in the market. Eventually, PSI will implode - it's just taking longerthan it really ought to.Between writing this and sending it - cited from the PSI web site:"PSI Open Mainframes are the first mainframe servers that can run the z/OS, Linux, Windows andUNIX on a single server foorprint."Bolleaux. Even some configurations of the late unlamented IBM xSeries 430 could do that.Some of PSI's claims really stretch credibility.-- Phil Paynehttp://www.isham-research.co.uk+44 7833 654 800----------------------------------------------------------------------For IBM-MAIN subscribe / signoff / archive access instructions,send email to [EMAIL PROTECTED] with the message: GET IBM-MAIN INFOSearch the archives at http://bama.ua.edu/archives/ibm-main.html
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