Amdahl Corporation - Market Exit

Market Exit

Amdahl Corporation enjoyed perhaps its best sales during IBM's transition to CMOS technology in the early to mid 1990s. At first IBM's new mainframe CMOS processors, the IBM 9672 G3 and G4, could not perform as well as spare-no-expense bipolar technology, giving Amdahl a temporary advantage. However, IBM's CMOS strategy paid off in the long run, allowing IBM's Poughkeepsie factory to produce even faster mainframes at lower cost as the technology matured. By the time IBM introduced its breakthrough 64-bit zSeries 900 in 2000, it was all over for Amdahl's hardware business, which only had 31-bit-addressing Millennium and OmniFlex servers to sell. In late 2000, Fujitsu/Amdahl announced that the company had no plans to invest the estimated US $1 billion (or more) to create an IBM-compatible 64-bit system.

Historically it is unclear whether Fujitsu/Amdahl made the right decision. Despite heavy competition from other server platforms, IBM's zSeries has enjoyed a resurgence due to the widespread adoption of Linux and the escalating transaction volumes (in CICS, IMS, DB2, and other mainframe subsystems) brought about by e-business growth. IBM's zSeries revenues are actually increasing despite declining prices. As of late 2005 IBM is the only manufacturer of production-grade IBM-compatible mainframes. However, Fujitsu announced in late 2005 that EDS would sell its line of "mainframes" outside Japan. Unlike prior models, these Fujitsu systems are not compatible with IBM's and cannot run z/OS, but the announcement has customers wondering if Fujitsu will take the next step in re-entering the (now growing) market. Amdahl also failed in its effort to introduce ObjectStar software (initially known as Huron) during this period and that product later became a successful management buy out(MBO). Objectstar was later on acquired by integration software vendor TIBCO in 2005.