VM Software Inc, the IBM VM/370 specialist of Reston Virginia, is facing a few stagnant quarters ahead as it gambles research and development funds on new software for the 9370. According to Electronic News, the company is, for the first time, spending money on a new package in anticipation of revenues it hopes will come […]
VM Software Inc, the IBM VM/370 specialist of Reston Virginia, is facing a few stagnant quarters ahead as it gambles research and development funds on new software for the 9370. According to Electronic News, the company is, for the first time, spending money on a new package in anticipation of revenues it hopes will come when the 9370 volume shipments ramp up sometime next year. The new software, VMCenter II, is a combined data management package for system security, resource accounting, storage management and workload balancing. VM blamed its investment in this development effort, expansion of its sales department and saturation of VM sites with the original VMCenter product for some dull figures. Revenues for the second quarter of 1987 were up 8% to $6.8m, but per share earnings crashed to two cents from 15 cents a year ago. VM reckons that about 80% to 85% of 9370s, which started shipping earlier this year, will be used to run the VM operating system and the company reckons IBM will sell 3,000 to 5,000 9370s this year and about 20,000 in 1988. It is a bit more cautious about predicting rate of installation of those 9370s and accompanying sales of VMCenter II. VM president Richard Earnest explained that the investment in the new software was heavy because VM had to adapt it to the 9370’s target market – the white collar worker as opposed to a system professional. The current rate of development investment, no figure was given, will continue beyond VMCenter II because the company intends to adapt its products for VM/XA, which IBM announced in June. Meanwhile, VMCenter II will be priced according to the machine model and volume discounts will be available. Permananent licence fees will run from $11,000 at the low end to $66,000 at the top but Earnest said he wanted to encourage fixed term leasing rather than permanent licensing in order to expand VM’s long-term cash flow. VM is facing increasing competition in the 800 VM sites in the US. IBM itself markets VM Software’s VM’s Backup, Tape and Archive programs but this year it came out with a direct competitor to VMBatch, VM’s batch processing software. But VM faces more serious competition in the VM market from Computer Associates, a weightier adversary after its Uccel aquisition. It is also looking at new markets: last year it created a new division, Applied Relational Technology, to develop products for SQL/DS. VM Software will shortly be following up SQL/Edit Plus with a report generator.