Re: A very high price to the user for the elimination of competition

Due to unavoidable turbulence ahead, please, buckle your seat belts.  
It's going to be bumpy ride. 

TurboHercules and Neon are in for quite a fight.  Neon is attacking 
IBM's software revenues and TurboHercules is attacking the monopolistic 
position of mainframe hardware.  And both companies are attaching the 
tying of software to hardware.  Wow.  Interesting times.  Maybe Neon and 
TurboHercules should work together.

While IBM will argue the mainframe is just a niche system in the huge 
worldwide market of computing hardware, for the companies that joined 
computing in the pre-mainframe world when mainframe's were the only 
option the monopoly continues.  Such tactics are the real proof of the 
monopolistic position.  If there was real competition, these prices 
could not persist.  Even though it doesn't admit to being a duck, if it 
walks like a duck and quacks like a duck... well you get the point.

Microsoft offers an interesting lesson in this area.  Everyone might 
have wondered what the big deal Linux was to Microsoft.  In real numbers 
Linux had not really done any significant damage to Microsoft, 
particularly in the early days.  However, companies can strive for 
really two positions in a market: cost leader or differentiation 
leader.  Translated in customer terms these are, respectively, lowest 
cost product or highest value product.  In the distributed software 
space, Microsoft was BOTH.  This is extremely rare for a company to be 
both.  Linux caused Microsoft to lose its cost leadership position in 
the distributed software space.  That is why Microsoft cared so much 
about Linux.

In the mainframe hardware space, IBM has both leadership positions.  
Both Microsoft and IBM achieved these positions through the monopolistic 
practice of tying products together.  It is interesting that open source 
is playing a role in both the Microsoft and IBM scenarios and is 
attacking the same thing: market cost leadership.

Harold Grovesteen

Roger Bowler wrote:

>  
>
> Lynn Wheeler writing yesterday in the ibm-main forum under the topic
> "25 reasons why hardware is still hot at IBM" made reference to a
> z/Journal article from Feb/Mar 2006 by Barry Graham of Arcati
> (ex Xephon) http://www.zjournal.com/index.cfm?section=article&aid=346 
> <http://www.zjournal.com/index.cfm?section=article&aid=346>
>
> In this article Barry said:
>
> "The net result of the slowdown that has occurred since the '90s, when
> IBM first began to limit and ultimately eradicated all mainframe
> processor competition, is that the price per MIPS today is
> approximately six times higher than the $165 per MIPS that the
> traditional technology/price decline link would have produced. As a
> result, the largest systems today cost closer to $18 million than the
> $3 million they have cost throughout most of the mainframe's history--a
> very high price to the user for the elimination of competition."
>
> I believe that Hercules is positioned to be the catalyst for restoring
> competition in the mainframe market. I think IBM recognize this too.
>
> --
> Regards,
> Roger Bowler
> http://perso.wanadoo.fr/rbowler <http://perso.wanadoo.fr/rbowler>
> Hercules "the people's mainframe"
>
> 



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