As is usual with a major IBM announcement, the raw details of the company’s new top-end disk drives and controllers (CI No 758) were just the tip of the iceberg, and at least as important are the moves the company has made to wrong-foot the competition and keep customers loyal while they wait for the best of the new goodies, which do not arrive until the third quarter of next year. IBM’s announcement on Tuesday finally put an end tomonths of rumours and the new offerings promise to breathe new life into a segment of IBM’s business that had become sluggish as users held off acquiring disks they feared might soon become obsolete. Digital servo IBM appears to have done everything it can to improve disk sales during the critical fourth quarter it faces, and additionally has laid the foundation for more announcements that will be made during the coming year. Foremost among IBM’s announcements are the new versions of the 3380 disks that use, for the first time, a digital servo mechanism to improve access speeds. The 3380-K stores 7.5Gb, and like other 3380s comes in A (head-ofstring) and B (tail-of-string) versions. The AK4 costs $128,000 and the BK4 is $105,000. The 3380-J stores 2.5Gb; its A model costs $82,000 and its B costs $59,000. These prices are significantly lower than those of prior 3380s, and the maintenance charges for the new disks are even more aggressively priced. The new drives come with one-year warranties, up from three months; after that, the A model charges for both models come to $225 a month and the B model service charges are $165. All these disks will be shipped to users beginning October 2. Installed J models can be upgraded in the field to K models for $60,000 a box. The innovative third disk drive, the 3380-CJ2, will be unavailable until the third quarter of next year. It contains one head-disk assembly (compared with two on all the other 3380s) but includes a built-in controller. Priced at $70,000 with $230-a-month maintenance, it will provide users with an entry path to the 3380 family. The small controller in the CJ2 is actually half of a new disk controller that is also slated for first deliveries during the third quarter of 1988. This family, designated 3990, consists of three models, the largest of which can accommodate a substantial cache. Each 3990 model 2 or 3 looks and acts like two 3880s, and the model 1 looks like a 3880-3. All models respond faster to a mainframe’s requests for data than predecessors. The model 1 costs $60,000; maintenance is $185 a month. The model 2 offers double the number of data paths – four – and 3990s can be linked in pairs for redundancy. It costs $110,000, and maintenance is $370 a month. The model 3 offers cache memory up to 256Mb (compared with a 64Mb maximum on the prior 3880s with cache), a battery-backed 4Mb memory, and supports disk shadowing – each transaction is automatically written to a pair or disks. The 3990-3, when used with 4.5Mbytes-per-second channels now available on the 3090 line of mainframes, will run at the channels’ full speed. In addition to offering new storage products, IBM has realigned the prices and features of certain existing drives and controllers. The most significant move was a dramatic reduction in month-to-month rental charges for 3880 controllers. This move will mollify users who might otherwise feel caught between the acquisition of doomed 3880s and one-year delays in getting new 3990s. The price changes affect only 3880-3s and cache-equipped 3880-21s and -23s.Rental on the 3880-3 was reduced to $1,370 from $4,124. On 21s and 23s, the rentals are the same on comparable configurations: a D now rents for $2,940 compared with $8,965; an E rents for $3,900 versus $11,300; a G is now $5,825 versus $15,970; an H is now $7,750 versus $20,640; and a J is now $9,675 versus $25,310. Rentals on key extra features have similarly been reduced by about 60%. IBM has said that cache-equipped 3880s will be able to transfer data at 4.5Mbytes-per-second when a new $3,000 feature is added – but no date was given. All 3880s (except some very old
ones with low serial numbers) can accept the new disks by the addition of a $5,000 feature; the $5,000 will be refunded when a user buys a new disk, making the feature free. Prices on older 3380 disks have been cut about 8%: the AD4 to $82,000; the BD4 to $59,000; the AE4 to $113,000; and the BD4 to $90,000. Upgrades of Ds to Es are now $40,000, off from $43,660.All this activity will stir up the disk business, generally providing a welcome stimulus, but in some cases IBM’s actions may cause significant harm. Among those affected will be users, lessors, and financial entities that provide backing for some lessors. Users will be thrilled by the new products; they pretty much answer all the questions that have been on the minds of top computer executives all summer. At the same time, users who own, rather than lease, older IBM storage equipment will have to face some potential losses as they sell old gear to make room for new. Ironicallyl users with IBM’s original 3380s, already pretty cheap compared with new ones, may actually find that their AA4 and B4 drives are in greater demand than ever. All 3880 controllers, however, will lose value. Income funds Lessors will have to reckon with IBM’s low controller rental rates and also face the possibility that 3380-D and E disks may lose appeal (and value) as users switch to newer units. The exact amount of the losses cannot be forecast at this time; a great deal depends on the rate at which IBM can ship new equipment. Investors in leases, in particular those entities known as income funds, will have to face the consequences of their past actions. These funds were very aggressive in their investment practices, and assumed very high residual values for IBM storage products. Now these values are unlikely to be realised, particularly where 3880 controllers are concerned, and the funds could face severe stresses.As for IBM, the short-term outlook appears to be brighter than ever. The company should be able to sell all the disks and controllers it can build during the next year or so. By the end of 1988, however, disks built around a 14 form factor may be eclipsed by more compact units. The challenge for IBM at that time will be to introduce new technologies without causing the market to pause. Most likely, new disks will be introduced from the bottom up, pushing users toward the upgrade of 3380-Js to 3380-Ks.Replacements for the top-end Ks are probably two to three years away, and, as is so often the case these days, depends as much on the tactics of IBM’s Japanese competition as it does on IBM’s wishes.
