The purpose of this blog is to highlight that major companies still rely on IBM i…and for good reason.
Disclaimer: IBM i is an operating system. iSeries and AS400 are servers. I use these terms interchangeably to make it easy for folks to find this information on the web.
In a world obsessed with cutting-edge technology, Costco is quietly dominating the $222 billion retail game using software and hardware that predates the World Wide Web. Here’s why that’s not just genius—it’s a masterclass in strategy.
Costco Wholesale Corporation, the membership-based retail juggernaut with over 900 warehouses worldwide, is a model of modern retail success. But behind the bustling aisles and bulk bargains lies an astonishing secret: Costco still runs on technology from 1988.
At the heart of its operations is IBM’s AS/400 system—a legacy platform most companies ditched decades ago. While competitors chase cloud-based solutions and AI-driven automation, Costco’s commitment to its decades-old tech stack is paying off in spades. Here’s how and why this “fossil” of enterprise computing might be one of the smartest IT decisions in the retail world.
The AS/400: Costco’s Unlikely Hero
Launched in 1988 by IBM, the AS/400 (now technically the IBM i) was built for rock-solid business computing. It handles critical functions like inventory management, payroll, and sales transactions. At Costco, you can still see the green-screen interface in use at point-of-sale terminals and inventory lookup stations—proof that the system is alive, well, and integral.
But here’s the kicker: the AS/400 is practically bulletproof. It’s never been hacked in the classic sense. Its age and obscurity act as an unintentional cybersecurity shield.
Why Costco Clings to “Outdated” Tech—and Wins
1. Unmatched Reliability
The AS/400 boasts legendary uptime—often exceeding 99.9%. For a retailer processing millions of daily transactions, that kind of dependability is gold. Unlike modern systems that require constant patching and updates, the AS/400 just works—with minimal maintenance or downtime.
2. Security Through Obscurity
How do you hack something no one writes malware for?
Modern ransomware is built to exploit Windows or Linux systems—not obscure platforms from the 1980’s. There’s not a single known ransomware strain that targets the AS/400. That’s not to say Costco doesn’t take security seriously—it layers in modern encryption and authentication—but its core system flies under the radar of most cybercriminals.
3. Extreme Cost Efficiency
Costco is famously frugal. Its SG&A (selling, general, and administrative) expenses are just 10% of revenue—half that of competitors like Walmart. Maintaining the AS/400 costs a fraction of what a modern ERP system like SAP or Oracle would demand in licensing, migration, training, and potential downtime.
As former CFO Richard Galanti once joked, their IT was “always up and running, but band-aided to death.” And it works. That thriftiness fuels Costco’s ability to keep prices low for its 134 million members.
4. Focus on What Matters
Costco’s entire strategy revolves around doing a few things exceptionally well. With only 4,000 SKUs (vs. Walmart’s 140,000), its inventory is streamlined. The AS/400 is a perfect match for this low-variety, high-volume model. Its powerful batch processing capabilities handle backend operations without bloated software ecosystems or expensive consultants.
By sticking with what works, Costco can focus on delivering value to customers and investing in employee pay—not flashy tech.
The Takeaway: Sometimes Old Beats New
In an era where companies are seduced by “digital transformation” buzzwords, Costco’s loyalty to the IBM AS/400 is a bold statement: new isn’t always better.
Instead of chasing trends, Costco doubled down on what works—simple, secure, stable, and cost-effective systems that align perfectly with its business model. It’s not retro. It’s strategic.
The Bottom Line: Costco’s 1988 tech stack is more than a quirky relic. It’s a blueprint for how legacy systems, when properly maintained and strategically deployed, can outperform the latest and greatest. The future of retail? It just might be green-screen.
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https://www.source-data.com/ibm-i-on-power-server/
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