IBM's 64-bit zSeries mainframe announcement has had as its
surprising first effect the exit of its one remaining competitor
from the market, writes Nicholas Enticknap
Amdahl has announced it is discontinuing all R&D in its
S/390-compatible mainframes, and will stop selling them at the end
of parent company Fujitsu's next financial year, in March 2002.
Until then, the company will continue to offer its current
32-bit Millennium 2000C and 2000E systems, while support for all
current models will continue for a further five years to March
2007.
The timing of the announcement, if not the substance, came as a
surprise to Amdahl employees. It follows the appointment of new
chief executive Yasushi Tajiri in October. No sooner had Tajiri sat
at his desk than IBM launched the zSeries, and this prompted the
review of the substantial investment needed to develop a rival
version.
Amdahl's European marketing manager Tony Whalley said, "The
64-bit architecture requires a fair amount of R&D, and we would
not get a large amount of benefit back for two to three years. Most
of the business is in the open systems market."
Amdahl has, in fact, already invested a significant amount in
producing a 64-bit competitor for the zSeries, and has been telling
customers the product would be released at the end of next year.
There are over 200 engineers working on mainframes at the company's
California headquarters. Amdahl is currently working out what to do
with them.
Fujitsu has estimated the cost of the withdrawal, officially
described as a restructuring, at over $500m (£330m). The decision
has forced the Japanese electronics giant to downgrade its profit
forecast for the financial year to March 2001 by more than a
half.
Amdahl's decision is not only very costly but is also an
abandonment of the company's heritage. It started life as a
mainframe supplier back in 1974 and was gaining 80% of its sales
revenue from mainframe hardware as recently as 1992. Last year,
however, mainframe business only accounted for about 10% of total
revenue and the company has gained more revenue from reselling
Sun's E10000 servers.
Amdahl is not saying what its mainframe revenue has been this
year. Overall the market has been very sluggish, and IBM has
reported falling sales for five consecutive quarters. This
undoubtedly influenced Amdahl's decision.
Whalley explained, "New applications are going on Unix and NT
platforms. This does cause an increase in capacity on the S/390
side in some cases, but it's an indirect capacity push".
Amdahl's decision follows the withdrawal of Hitachi and Comparex
from the IBM-compatible mainframe market in March, and leaves IBM
as the only supplier in a market that was fiercely competitive when
Amdahl arrived, a year before Microsoft was formed.
Amdahl will continue to sell its Platinum/400 disc mainframe
sub-system but can be expected to withdraw from the mainframe
storage market before long. The company's GSS 4900 Gigascreamer
disc sub-system, launched in September, was its first large
capacity system that cannot be attached to mainframes.