IBM Slashes Some Power7 Processor Prices

January 23, 2012 Timothy Prickett Morgan

The new year is well under way and IBM, as we report elsewhere in this issue of The Four Hundred, has closed out last year and is facing whatever new challenges it has. The big one is that new Opteron 6200 processors from Advanced Micro Devices and Sparc T4 processors from Oracle are out, and the even bigger problem is that the Xeon E5 processors from Intel are shipping under NDA to selected customers and are expected to launch this quarter.

And so, IBM is tweaking its Power Systems Power7 processor pricing a little bit to blunt the attack.

Interestingly, in announcement letter 312-008, IBM did not cut prices on the Power7 Gen 2 servers, as I call the machines that IBM announced in October 2011 to distinguish them from the processor cards with lower memory capacities and slower PCI-Express 1.0 that were the first Power7 machines to come out in February 2010 and throughout that year. (I call these Gen 1 machines, and the souped up Power 750 boxes with faster processors but the low memory and slower I/O the Gen 1.5 machines.) Rather, IBM cut prices on selected models of older Power 710, 740, and 750 machines–ones that I said last October would be inherently less valuable just because they had slower I/O and lower memory capacities.

Here’s how the price cuts stack up on various processor feature cards and core activations on those cards:

	Machine	Feature		Old	New	Percent
Server	Type	Number	Description	Price	Price	Change
Power 740	8205	8355	8-core 3.55 GHz Power7 processor card	$4,174	$3,339	-20%
Power 740	8205	8368	One Core Activation for Feature #8355	$2,765	$2,212	-20%
Power 710	8231	8359	8-core 3.55 GHz Power7 processor card	$2,500	$1,750	-30%
Power 710	8231	8372	One Core Activation for Feature #8372	$1,645	$1,152	-30%
Power 750	8233	EPA1	8-core 3.6 GHz Power7 processor card	$17,700	$12,390	-30%
Power 750	8233	EPB1	One Core Activation for Feature #EPA1	$9,000	$6,300	-30%
Power 750	8233	EPA2	6-core 3.7 GHz Power7 processor card	$7,000	$4,900	-30%
Power 750	8233	EPB2	One Core Activation for Feature #EPA2	$4,850	$3,395	-30%
Power 750	8233	EPA3	4-core 3.7 GHz Power7 processor card	$4,310	$3,017	-30%
Power 750	8233	EPB3	One Core Activation for Feature #EPA3	$5,029	$3,520	-30%
Power 750	8233	EPA4	8-core 3.2 GHz Power7 processor card	$5,940	$4,158	-30%
Power 750	8233	EPB4	One Core Activation for Feature #EPA4	$3,100	$2,170	-30%

I have thought for a long time that IBM was charging too much money for its eight-core, 3.55 GHz Power7 processors, and cards using this chip got a 30 percent chop on the entry Power 710 rack server and a 20 percent chop on the Power 740 box, which straddles the entry and midrange of the Power7 server lineup.

The four slightly faster processor feature cards that were announced in April 2011 for the Power 750 servers and their core activations also got a 30 percent chop.

To help you figure out how all the Power7 machines line up in terms of bang for the buck–the raw processor cards, the IBM i operating system, and Software Maintenance costs–I updated my patent-pending CPW Power Ratings and Costs for CPU, i 7.1, and SWMA for Power7-Based Processor Features table. The processors with the price cuts are shown with a light blue background so you can find them.

Some observations. First, none of the blades had a price cut. IBM must figure it has its pricing right for these machines. Second, IBM did not do an across-the-board price cut on all of the original Power7 machines from 2010, just the two particular SKUs of the Power 710 and Power 740 with that eight-core processor. Third, there was no price cut on the Power 720, the machine that is primarily aimed at IBM i 6.1 and 7.1 customers.

If you happen to need the capacity of the Power 750 and you are running IBM i, the price cuts on those Gen 1.5 machines are great. The price/performance of fully activated processor cards with IBM i and support is now lower on these machines than on the original Power 750 Gen 1 machines and only a little higher than Power 740 Gen 1 or Gen 2 boxes, which have the same prices even though they have different memory and I/O options. But when you add it all up, the cost of IBM i on those cores utterly dwarfs the cost of the hardware. IBM could give the processor cards away for free and the bang for the buck would not change all that much for any of the Power7 processor cards when running IBM i.

This may be the first deal IBM has on Power Systems iron in 2012–officially anyway–but I am pretty sure it is not going to be the last. If you are buying a Gen 1 machine, you should demand the same 30 percent price cut on Power7 processor cards and cores as IBM is willing to give on the Power 750 Gen 1.5 machines. With Power7+ machines expected this year, intense competition from X86 and Sparc iron, and a bunch of Power7 machines probably sitting in the barn at IBM’s resellers, there may never be a better time to get a discount on Power7 processors.