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Technology Stocks : IBM
IBM 305.75+0.3%Nov 14 9:30 AM EST
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To: Don Hurst who wrote (4683)2/10/1999 5:44:00 PM
From: Arrow Hd.  Read Replies (1) of 8218
 
Vanderslice must have done a great job, stock up six or so. The
advantage EMC has had is they have used industry standard components
to keep cost/expense down and then added in the function and
performance they want with microcode. They restrict this microcode
through licensing and require a subsequent user to come back to them
to get a new license including paying a second time for some of the
featurized function and performance. IBM licenses the microcode
(called Licensed Internal Code) to the machine and the "rightful
possessor" of the LIC is licensed to execute the code and run
standard diagnostics. But when the machine moves the LIC moves with
the machine to the next end-user including all the function,
performance and capacity that was purchased by the original owner or
their lessor. EMC does not do that. The second user pays a fee to
licence the LIC and pays again for any LIC implemented features. This
inhibits EMC DASD movements in the secondary market and lowers the
owners residual value since some of this value represented by LIC
features does not move with the machine. If EMC does not want the
DASD to cascade into the secondary market and compete with new DASD
from their factory they simply tell the original owner that the
relicensing of the LIC by their buyer is going to be very high and it
disincents movement. What happens is it does cascade but within the
enterprise not out on the open market. EMC will not even license LIC
to competitors such as IBM since they dont want any competitor to
exercise their DASD and write up competitive reports or reverse
engineer. On the other hand they do this to IBM and other vendors.
So there is no love lost here. There is an intense effort on many
fronts by many companies to become more competitive with EMC and
customers are just waiting for that day when their choices are more
flexible.
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