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Volume 21, Number 4 -- January 30, 2012

IBM Throws The Books At Big Power7 Shops

Published: January 30, 2012

by Timothy Prickett Morgan

If you are shopping for a big bad box to run IBM i, AIX, or Linux--or a combination of the three--then Big Blue has a deal for you on its enterprise-class Power 770, 780, and 795 servers. The deal that IBM offered to customers of System p5 590, System p5 595 machines in October 2007 and then in March 2010 on the Power 595 in the wake of the initial Power7-based servers, which came out a month earlier.

In announcement letter 312-011, Big Blue has rolled out the Power Systems 2 For 1 Power 7 Processor Book promotion. If you buy a Power 770, 780, or 795 machine with specific types and numbers of processor book cards (what you and I would call a system board or maybe even a motherboard) and activate a set number of Power7 cores on those processor books, then IBM will toss in the books for free.

As usual, the IBM announcement letter doesn't tell you what the pricing is on the features that are being discounted or what generations of Power 7 machines are covered by the deal. But I whipped together a table describing the features of the servers and their prices so you can see the discounts that IBM is giving on raw processing capacity for these big Power7 machines. This way I can save you the trouble, which is one of my jobs.

The first thing to notice about the deal is that IBM is asking customers to load up these Power Systems boxes with the maximum number of processor books the machines support, but only charging customers for half the maximum number of books and requiring customers to activate half the maximum number of cores inherent in those Power Systems machines. IBM is betting on the potato chip effect--that if you have the bag, you will keep putting your hand in the bag until the chips are gone, or in this case, all the chips are turned on and doing useful work.

When you do the math on the number of boards and processor activations you need to do, on the Power 770 machine using the 3.5 GHz chips that came out in February 2010 or the 3.72 GHz processors that came out last October--and which oddly enough have the same list price--IBM's promotion of tossing in a free processor book or two amounts to a 16.8 percent discount off the list price off the processor books and core activations required by the deal. The Power 780 machines as configured get a 23.1 percent discount off list for this deal, and the Power 795 machines get an 18 percent discount.

To be honest, these do not strike me as particularly deep discounts for such big iron, and on many configurations, increased prices for hard disk drives over large arrays could easily eat into these processor discounts on a fully configured system. That said, this is a new ceiling from which to discount, and it is also an indicator of the level of discounting that IBM needs to be willing to give on entry and midrange Power Systems iron. As The Four Hundred with reported last week, IBM cut processor card and core activation prices on selected Power 710, 740, and 750 machines by between 20 and 30 percent. Price cuts were not given across the complete entry and midrange product line, which leads me to believe that IBM is just trying to get rid of inventory in its warehouses and among channel partners.

This processor book promotion expires on June 22, which also tells you that IBM is not thinking of it as a permanent price cut but as a little something to entice customers to buy today ahead of the expected Power7+ processor and system upgrades, which could be announced in the second half of 2012. IBM is just trying to keep things moving here in the first half of 2012 and trying not to talk about Power7+ machines.

Expect more wheeling and dealing as 2012 progresses, and slightly different kinds of deals, too, since there is a new person, Zarina Stanford, in charge of Power Systems marketing. And people are not going to stop talking about what Power7+ may or may not be and how it stacks up to Sparc T5, Xeon E5 and E7, and Opteron 6200 processors.


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