End of an era...
Regards,
John
Amdahl Plans to Exit Market
For IBM-Compatible Mainframes
By DON CLARK
Staff Reporter of THE WALL STREET JOURNAL
Fujitsu Ltd.'s Amdahl Corp. subsidiary plans to stop developing new mainframe computers that are compatible with those of market leader International Business Machines Corp., ending a business that stretches back 30 years in Silicon Valley.
Yasushi Tajiri, Amdahl's president and chief executive, said it analyzed the new zSeries mainframes from IBM and decided that the cost of emulating the new 64-bit hardware technology wasn't worth the small revenues that Amdahl was likely to get. So Amdahl will shift its focus from machines that use IBM's System 390 operating system to those that use Unix software, and a chip design developed by Sun Microsystems Inc.
Amdahl's Autonomy Fades as Fujitsu Makes Offer (July 31, 1997)
Analysts said the move should reduce competition for IBM and choice for customers. Amdahl and Hitachi Ltd. sell lower-priced machines and together account for about a fifth of the mainframe market, Mr. Tajiri estimated. Hitachi had already signaled it is not seeking new customers for its IBM-compatible line.
"Its obviously not good news," said Steve Josselyn, an analyst with Framingham, Mass., market researcher International Data Corp. "When any company pulls back like this it says something about that market."
Mainframes historically did the heavy data processing chores for most companies, and were a lucrative business for IBM. But high-end machines running Unix have taken market share and helped reduce prices and profit margins.
Bob Djurdjevic, an analyst with Phoenix-based Annex Research, noted that IBM's pretax profit margin on mainframes and other high-end hardware was only 11.8% in the third quarter. "There's no money in it anymore," he said.
Amdahl was founded in 1970 by former IBM executive Gene Amdahl, a pioneer among Silicon Valley entrepreneurs. Fujitsu, an investor in the company that sells mainframes in Japan with its own operating system, purchased all of Amdahl in 1997.
Mr. Amdahl tried several years ago to start a new mainframe company but had trouble raising money because of concerns about competition in that business. He believes that one reason for Amdahl's decision is the fact that IBM doesn't now have to share technical details about its hardware, following the end of a requirement imposed in the 1980s by European regulators.
"I'm disappointed," Mr. Amdahl said. "I think it's going to be quite a loss for Fujitsu and its marketplace."
Mr. Tajiri said he believes the change won't require any layoffs at Amdahl, which employs about 1,200 people in Sunnyvale, Calif. He informed workers there Tuesday morning.
"I thought I would have some negative reaction," Mr. Tajiri said. "But most of the e-mails I have received from employees say that my decision was right." |
