Amdahl will leave S/390 mainframe to IBM

Enterprise hardware manufacturer Amdahl's decision to pull out of the mainframe market could lead to 'captive' IBM S/390 customers facing higher prices.

That was the warning from analysts and user groups this week as Fujitsu, Amdahl's owner, decided to follow rival Hitachi Data Systems' lead and cease development of S/390-based mainframe systems. The company blamed the decision on falling margins on hardware and the prohibitive cost of moving to a 64bit platform.

The move leaves IBM as the sole hardware supplier for the S/390 platform, adding to fears that it will seek to exploit its user base by charging higher prices. IBM has said it doesn't publish list prices for the platform, and relies on market forces to influence the pricing model.

"It's very unhealthy for the S/390 marketplace to have a single hardware supplier having a stranglehold," said Julie Williams, chairwoman of user group Guideshare Europe's systems group.

"We are concerned that this could result in higher prices for the platform."

"I think it's going to be quite a loss for Fujitsu and its market," said company founder Gene Amdahl, who sold out to Fujitsu. It is believed that Amdahl will support existing customers until 2007.

Analyst Gartner has warned that the decision could backfire on IBM if Unix suppliers exploit the lack of choice available on the S/390 platform.

Phil Payne, analyst for Isham Research, agreed. "The real issue for the platform is software pricing, which is still too expensive compared to the Unix world," he said.

First published in Computing