The Mainframe Market: A Bolt From Big Blue

Mainframe software makers have had a good thing going. You wouldn't think so from the slowdmwn in mainframe sales. But most large companies still run their businesses on mainframe programs, typically costing hundreds of thousands of dollars. And, thanks to IBM's "tiered" pricing scheme, software makers enjoyed hefty dividends: Under tiered pricing, fees were tied to machine size, so whenever a customer upgraded to a bigger "box," software makers charged more--often without having to add any new software. Some companies have been making as much as a third of their revenue from tier inflation.

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