CEO: March into higher-margin business to be fueled by acquistions
Watch out for the IBM Software onslaught.
The computer giant this week is launching products ranging from inexpensive e-mail to its long-expected DB2 Information Integrator middleware and a new fleet of Rational software tools.
The moves underscore what IBM Chairman and CEO Sam Palmisano last week called his company's continued march into higher profit-margin software and services. The effort has been fueled by at least eight acquisitions in the past 18 months, including the purchase last week of Think Dynamics (see story on page 84).
IBM's Palmisano: 'We don't buy revenue. [We want] to extend our core business.'
Palmisano indicated that IBM will continue its buying spree. "Our acquisitions in the past offer insight for the future," he said. "We don't buy revenue. [We want] to extend our core business.
"Profit is accelerating to software and services within the infrastructure space since a year ago," he said.
Mark Mendelson, director of e-business at Corning Data Systems, an IBM partner in Corning, N.Y., is bullish about the software assault. "The software division [seems] more stand-alone now and is doing what's good for software," he said. He said he expects his company to do significant new business this year as a result of IBM's new offerings. The new e-mail product, Lotus Workplace Messaging 1.0, in particular, could provide entree into new accounts for both Corning and IBM software. "It's priced aggressively and could go into new accounts," allowing partners to upsell and cross-sell additional IBM software and services, he said.
Lotus Workplace Messaging 1.0, which sources said will be unveiled Tuesday at IBM's Software Symposium in Munich, lives up to the company's promise of inexpensive e-mail for corporate users without dedicated PCs, as well as departments within the enterprise. The product will cost $9.60 per user annually, the sources said.
IBM would not comment on specifics, but last January the company promised to ship during the first half of 2003 what it then called "next-gen mail." A second release, due in the fall, will add calendaring and scheduling, the company has said. Some IBM partners and analysts said the e-mail offering could help WebSphere and DB2, the mail software's foundation technology, penetrate even non-IBM accounts.
Also this week, IBM plans to announce shipment of its long-awaited DB2 Information Integrator, which provides a middleware layer for accessing and integrating non-DB2 data, sources said. The software will be priced at $20,000 per processor or $15,000 per data source connector.
>> Information Integrator: DB2 data integration product; $20,000 per processor or $15,000 per data source connector
>> IBM Rational Rapid Developer: UML-based rapid application development tool for J2EE; $5,995 per license
>> IBM Rational XDE Tester: Automated testing tool for Java and Web applications; $2,995 per user license
>> WebSphere Business Integration: Suite of integration products tailored for various vertical market sectors
IBM's Rational division this week will unwrap updates to its entire suite of tools and unveil IBM Rational Rapid Developer, a new rapid application development (RAD) tool for J2EE based on the Unified Modeling Language, said Eric Schurr, vice president of marketing for the division.
The new RAD tool is a model-driven development approach for developers unfamiliar with J2EE. One solution provider said the tool potentially could compete with WebSphere Studio, but Schurr said it is aimed at developers without Java expertise and is not specifically intended for skilled J2EE developers, which are the target customers for WebSphere Studio.
IBM Rational Rapid Developer will ship by June 30 for $5,995 per user license, Schurr said. IBM also will begin offering a new automated testing tool for Java and Web applications, IBM Rational XDE Tester, at the same time for $2,995 per user license, he said.
"[The new tools] tend to confirm what every Microsoft-centric development shop that uses Rational fears: New and improved products will be Java-centric/exclusive and [will] first be available for WebSphere, then maybe available for Visual Studio .Net," said Richard Warren, vice president and chief solutions architect at Susquehanna Technologies, Winchester, Va.
IBM Software Group's Application and Integration Middleware Division also this week will unleash five new configurations of WebSphere Business Integration tailored for the automotive, banking, electronics, chemical and petroleum, and energy and utility industries, said Jeff Henry, director of WebSphere Business Integration software at IBM. And it will continue its trend of rebranding its existing software products under the WebSphere umbrella by changing the names of two products formerly sold under the MQ messaging software brand, Henry said.
Brad Murphy, senior vice president of strategic business development at Paris-based solution provider Valtech, said IBM's flood of software is a double-edged sword. Solution providers that can provide extensive J2EE design and development are benefiting from the need for integration services around the products, but customers that go with IBM because the vendor promises its software is well-integrated out of the box are in for a rude awakening, he said.
CRAIG ZARLEY contributed to this story.