IBM Message Board - Msg: 7408376

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Technology Stocks : IBM

IBM 304.76

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Nov 3 3:59 PM EST

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To: George W Daly, Jr. who wrote (4458)	1/21/1999 5:11:00 PM
From: Arrow Hd.	Read Replies (2) of 8218

Most S/390 processor complexes are part of large bids done on a bottom line basis. The bid includes all kinds of offerings including software and services. So hardware suffers price attrition to close the "total cost of computing" target. But when 60 percent more MIPs are shipped in mainframes and the software is charged for on a functional basis (the more processor MIPs the higher the software charge) then IBM receives additional software revenue at no additional cost. Not totally pure profit but as close as you can get. The key to focus on is 60% more MIPs shipped and these are still very profitable MIPs. Obviously, containing price attrition would be a better scenario but it is very competitive out there.

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