Midrange Stuff, OS/400 Edition

IBM today will announce a new server in its iSeries product line to help the company and its channel better pursue sales opportunities at small and midsized businesses that like the low prices of the Model 800 but want a machine that can run the full enterprise edition of OS/400 and get more 5250 OLTP processing capacity. IBM also will announce several new upgrade paths to the Model 810 and Model 825 servers from prior generations of machines.

Today was clearly going to be a big server announcement day for Big Blue, which also is launching its 32-way "T-Rex" zSeries 990 mainframes in an event in San Francisco. It is likely that IBM had planned to launch the "Regatta" pSeries 655, 670, and 690 servers using the 1.5 GHz and 1.7 GHz Power4+ processors this week, too, but the company pulled those announcements ahead last week to try to steal some thunder from rival Hewlett-Packard. Judging by the availability dates on the pSeries servers--in August for new machines and September for upgrades--it looks like IBM pushed this Unix iron out a lot earlier than it had planned for competitive reasons. Customers contemplating a purchase of a midrange or an enterprise Unix server of alternative makes and models will now have to take a look at the faster Power4+ machines. Even if customers don't take delivery of machines until the fall, those are sales IBM would not have gotten in 2003 at all. Such an early launch is disruptive to customers already lined up to buy a pSeries machine, but IBM reckons it has kept price/performance on new and old pSeries machines consistent with that of the new Power4+ iron. Noses won't be bent too far out of shape if this is true.

The announcement of a new entry iSeries machine seems rather small when compared with the zSeries launch today and the pSeries launch last week. But it may turn out to be one of the more important announcements that IBM makes, in terms of the viability and profitability of the iSeries line, which still brings home about $1.7 billion in iSeries server and OS/400 operating system sales a year for the company, and perhaps half of that is profit. IBM's Power-based server strategy is to use the profits from the iSeries to fund price cuts on the pSeries, so it can eat market share from HP and Sun Microsystems, but this only works if enough companies are buying iSeries machines. The OS/400 installed base is dominated by modest-sized companies with similarly modest computing capacity needs, even though IBM builds very powerful 32-way iSeries machines for its largest customers (which are very few in number). The launch of the new iSeries Model 810 as a lower-cost entry point into the iSeries line will undoubtedly help IBM push more iSeries boxes in 2003. And because most customers are buying the full OS/400 enterprise edition (with its 5250 green-screen OLTP capability and much higher price tag), rather than the bare-bones OS/400 standard edition (which does not include 5250 OLTP), the profitability of the iSeries line should not be adversely impacted by a lower-cost machine.

The Model 810-2465 is a uniprocessor server based on the same 540 MHz S-Star PowerPC processors as the Model 810-2466, which was previously the smallest iSeries machine that could run the full OS/400 enterprise edition; this and other machines debuted in a revamped product line that IBM announced in January, which included substantial price cuts and different packaging.

The base 810-2465 comes with 512 MB of main memory (upgradable to 16 GB) and can support up to 14 TB of disk capacity. These memory and disk capacities are the same on all Model 810 servers, including the two-way Model 810-2469 server. The big difference with the Model 810-2465 is that IBM has geared down the performance of that 540 MHz S-Star processor by 25 percent and has cut the price of the machine configured with OS/400 enterprise edition by 29 percent. The base Model 810-2465 with the standard edition of OS/400 costs $11,000 and provides 750 CPWs of processing power on non-5250 workloads. (Commercial Performance Workload is a relative performance metric for the iSeries and AS/400 line that is loosely based on the TPC-C online transaction processing benchmark test.) The Model 810-2466 server with standard edition costs only $12,000 and delivers 1,020 CPWs of power, so it is clear that customers who want just the standard edition would be foolish to buy the new entry Model 810 that IBM just announced. They should spend the extra $1,000 and get 36 percent more throughput on non-5250 workloads. However, for customers who want to use the enterprise edition of OS/400, the Model 810-2465 actually offers slightly better bang for the buck than the three other Model 810 machines in the iSeries line. The Model 810-2465 with OS/400 enterprise edition costs $55,000, or about $73 per CPW on 5250 OLTP workloads, which compares favorably with the Model 810-2466, which costs $78,000, or $76 per CPW. The more powerful Model 810-2467 and 810-2469 servers cost $120,000 and $230,000 respectively, and that works out to $82 and $85 per CPW. The new Model 810-2465 is in the P10 software tier, just like all but the two-way Model 810-2469, which is in the P20 tier. The new Model 810 will be available on May 23.

IBM wants to get as many customers with AS/400 7XX and first-generation iSeries 8XX vintage servers into the new product line this year, and that is why IBM has expanded the number of upgrade paths from these older machines to the new product line. As of today, customers with Model 720-2061, 720-6062, 820-2395, and 820-2435 machines can upgrade to the new Model 810-2465. IBM also has added upgrades to the Model 825 server (which is essentially a rebranded pSeries 650) from 720-2061, 720-6062, 730-2065, 820-2395, and 820-2435 servers. Like all other AS/400 and iSeries upgrades, these upgrades allow customers to retain the serial numbers of their machines, and therefore they do not have to initiate a new depreciation schedule on the upgraded machine. These new upgrades also will be available on May 23. Remember that upgrades from Model 7XX machines to the new iSeries line will be available only until October 7. After that, customers will have to do a push-pull system swap, and they will not be able to retain serial numbers.

In addition to the new server and upgrade paths, IBM has announced a prepaid on/off Capacity on Demand processor features for the iSeries that is very similar to a similar temporary CoD feature the company announced for the pSeries line last week. IBM did not announce CoD memory features for the iSeries line, however, as it did for the pSeries last week. IBM has already been offering on/off CoD on the iSeries, but it was a pay-after-use model. The new prepaid method, which works like a debit card, has a price per processor that is 25 percent lower than in the post-pay temporary CoD offering. In the iSeries line, the entry Model 800 and 810 servers do not have CoD features, because they are generally uniprocessor machines (so there are no extra processors to activate) and because IBM believes it can't make money selling fractions of a single processor under a CoD scheme. (I happen to think IBM is wrong about that latter point.) In any event, a prepaid CoD processor for a six-way Model 825 server, which uses IBM's 1.1 GHz Power4 processors, costs $24,800 for 30 days of use; that's $827 per day, down from $1,100 per day in the post-pay model. To get a prepaid 30-day use of the 1.3 GHz Power4 processor used in the 16-way Model 870 server, customers shell out $27,000, or $900 per day; that price is down from $1,200 per day for the post-pay temporary CoD that IBM announced in January. On the 32-way Model 890, which uses the 1.3 GHz Power4 processors, 30 days use on a processor costs $29,400, or $980 a day, in the new prepaid CoD scheme, down from $1,300 per day in the post-pay pricing method.

On the software front, the iSeries team is expected to announce several patches to the DB2/400 database integrated with the OS/400 operating system that switches on a new SQL query optimizer that was actually rolled into OS/400 V5R2 a year ago. The new optimizer can improve the performance of read-only, complex queries (like those used in data warehouses) by a factor of 2 to 5. The patches also include a free Oracle migration toolkit to convert data, stored procedures, and SQL calls, and to replicate database schema, to DB2/400 format. Whether this is the point of a spear that IBM intends to use to try to convert lots of Oracle shops to the iSeries, or something that a few customers needed and that IBM is giving away just because it can, is unclear.

IBM also is expected to announce today that DB2 Universal Database 8.1 for Linux, which was announced last week on Intel iron, will be available on May 23 on Linux partitions running on the iSeries. IBM says further that it will have its WebSphere Application Server ported to Linux on the iSeries by the third quarter of this year. Finally, as expected, IBM will roll out support for the new Microsoft Windows Server 2003 operating system on the Integrated xSeries Server coprocessor cards in the iSeries line, which are based on Pentium 4 Xeon DP processors, and on xSeries servers attached to the iSeries through the Integrated xSeries Adapter interface cards. The IxS servers and IxA cards allow Windows machines to plug right into the iSeries I/O bus and use iSeries disks as their own storage devices, simplifying network connectivity and backups.