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IBM Cuts AIX Software Prices for i5 520

IBM announced last week that it has created a new software group for its AIX 5L 5.2 and 5.3 Unix variants that will allow AIX to better compete against Linux on software licensing costs.

The dirty little secret in the Linux market is that no one who is creating a high-performance computing cluster actually pays for the server version of Linux, but, rather, uses a stripped down workstation version that costs a lot less. In order for AIX to compete on equal footing in the politically and economically important HPC space (IBM's customers have a large installed base of Power-AIX applications that are not so easily ported to Linux), IBM needed to cut AIX prices, which is exactly what the company did this week.

Specifically, IBM has created a new D5 software group for AIX 5.2 and 5.3. The ValuePak low-cost version of AIX 5.2 and 5.3, which is missing some features of the full releases, will cost $150 per processor. A regular AIX license will cost $170 per processor. This new lower-priced license is available on the two-way, Power5-based eServer p5 and i5 servers, as well as on the two-way, PowerPC 970-based JS20 blade servers for BladeCenters. Before this announcement, customers had to pay $385 per processor on either a p5 520 or an i5 520. That higher pricing remains in effect on the p5 550 and the i5 550; on the bigger p5 570s and i5 570s, which scale up to 16-way processing, AIX costs $1,225 per CPU. Virtualization Engine features for AIX 5.3 cost a few hundred dollars per CPU on top of that in the p5s, and is bundled for "free" in the i5 line.

IBM Said to Be Working on iSeries-Specific Financing Deal

Get ready for the old carrot-and-stick routine, OS/400 customers. As we reported two weeks ago, IBM is once again offering its "Low Rate Financing" deal for hardware, software, and services, including the iSeries. But we have caught wind of a new deal aimed specifically at OS/400 shops that will see IBM drop financing rates significantly for iSeries 270, 820, 830, and 840 shops that upgrade to eServer i5 machines. This special iSeries financing deal is expected to be announced sometime in February, according to sources.

The word on the street is that full payout leases on the upgrades will be as low as 1.99 percent and that fair market value leases will be about 2.5 percent lower than the rates IBM is charging under the Low Rate Financing deal for the iSeries, which stands at 3.85 percent right now after those rates were dropped two weeks ago. That's the carrot part of the deal. The word is also that IBM will withdraw upgrades from these first-generation iSeries at the same time (that's the stick part, in case you were wondering). IBM could pull the plug on those upgrades sometime in September or October, according to sources.

IDC Closes the Book on 2004 IT Spending, Projects to 2008

The analysts at IDC have churned through their models of the world's economies and IT spending patterns, and have come to the conclusion that the worldwide IT market accounted for $965 billion in 2004, and will grow at a compound annual growth rate of 6 percent to hit $1.2 billion by 2008. While this is not dot-com-boom growth, it is pretty healthy growth, and hits right smack in the middle of most of the other estimates made so far.

IDC did not say how 2005 would look on a worldwide basis (you have to pay to get that information), but, as a teaser, it said that IT spending in the United States will be up 5.8 percent over 2004 levels, hitting $416 billion. The company expects spending growth in the United States between 2004 and 2008 to compound to an average of 5.9 percent. This year, worldwide software spending is expected to hit $213 billion, up 7 percent, and services are expected to grow 5.7 percent, to $423.8 billion.

JDA Says It Had Record Sales in Q4

Retail software specialist JDA Software Group says that sales were brisk in the final quarter of 2004. In fact, the company says that it signed a record number of deals for new software licenses and a record number of deals involving multiple software product lines.

JDA hasn't announced its financial results for the fourth quarter yet, but wanted to get some of the good news out early. The company said that it closed 122 software deals in the quarter, including 15 deals with multiple product lines included in the sales. All of those deals came to $20.3 million in software licenses, and about $12.9 million of that (64 percent) came from the installed base of JDA customers. JDA has 4,600 retail customers using its software, many of them running on the OS/400 platform.

Given its large customer base, its focus on the retail sector, and improving financials, it would not be surprising for JDA to merge with or be acquired by other players, like SSA Global or Infor Global Solutions. Both companies have been on acquisition binges in recent years, as have many others. With annual sales well north of $200 million and a market capitalization that is moving toward $400 million, JDA might be too expensive for these companies to buy outright, however.

Judge Tells IBM to Stop Dragging Its Feet and Cough Up the AIX and Dynix Code for SCO Suit

The SCO Group has scored a minor victory in its $3 billion Linux-Unix lawsuit with IBM, with the U.S. Magistrate Judge on the case, Brooke Wells, issuing an order that compels IBM to respond to further discovery by SCO's lawyers and to make available more source code for the AIX and Dynix Unix variants that IBM controls. By opening the discovery process a little wider, SCO will presumably be able to find the smoking gun that proves IBM illegally dumped Unix code into Linux. This presumption may, of course, turn out to be just that: a presumption, not a fact. IBM has been given until March 18 to produce the additional code and related documents. Provided the summary motions to dismiss that IBM filed are not effective, the case will go to trial sometime in November. But you can bet IBM's lawyers will continue to push the legal limits of time-stretching, which is why SCO cleverly negotiated a cap on legal fees with its lawyers. By the way, if IBM doesn't cough up the code, Judge Wells has said she will then order SCO to have unfettered access to IBM's code repositories.

In a separate development, two weeks ago, SCO's lawyers filed a motion with Judge Kimball for IBM's chairman, Sam Palmisano, to be deposed as part of the lawsuit. Back at the end of 1999, when IBM first caught Linux fever, it was Palmisano, as head of IBM's Server Group, who lead the charge. Shortly thereafter, he was named president and chief operating officer, thereby being anointed as the company's future chairman and CEO once Louis Gerstner retired. IBM's lawyers, according to the SCO filing, have contended that, "Palmisano does not have 'any knowledge' of any facts relevant to this litigation." This seems unlikely, since he was the one who picked the Linux czar at IBM and realized that Linux was going to be a gravy train--at least if you believe the PR IBM was generating at the time.

Hitachi Debuts Improved SATA Disk Drives

Disk drive maker Hitachi, which took over IBM's disk drive business last year, has announced new Serial ATA disk drives that adhere to the new SATA 2 spec, delivering data transfer rates of up to 3 Gbps. When equipped with new SATA 2 disk controllers, the Hitachi disks can deliver up to 61 percent better performance than with the SATA 1 disks the company has been selling (which are based on IBM designs).

With a 500 GB capacity and reasonably fast transfer rates for 7200 RPM disks, these new disks are suitable for low-cost RAID arrays. Despite the low mean time between failure for SATA disks, compared with SCSI units, RAID data correction algorithms can more than make up for the lower reliability of SATA hardware, and for many applications, a much lower cost per terabyte is more important than having rock solid disks. There is an opportunity here in the iSeries market, especially for nearline storage.

IBM Gives Data Centers What They Really Need: SOMA

Sometimes, you just have to laugh at the ridiculous acronyms in the computer business. IBM Global Services this week announced a perfectly reasonable new offering with the unfortunate name of Service Oriented Modeling and Architecture, or SOMA. Everybody is interested in designing and implementing more flexible information technology and applications that reside on top of it, and that is what SOMA is all about. Unfortunately, that is also the name of the drug that people blissed out on in Aldous Huxley's sci-fi classic, Brave New World. Oops. But sometimes it's hard to stop the IBM marketing machine once it gets in motion in Somers, New York (not to be confused with Soma, New York, where all IBM marketing focuses on the iSeries). IBM is clearly excited about services-oriented architectures (SOAs), and for all we know the SOMA name is absolutely appropriate, since it is supposed to systematically analyze and reorganize all business processes, tweak them for improvements, and get IT aligned with these changes in such a way that future refinements are more easily implemented.

Sounds like a drug to us.