IBM Rejiggers Power Systems, System i and p Prices

Published: February 2, 2009

by Timothy Prickett Morgan

It is a tough economic environment out there, and with IBM trying to scare up a little midrange business, sometimes that means making more deals and sometimes that means raising prices so the deals you have give you a little more dough. As is usually the case, you have to have a lot of time on your hands to figure out exactly what IBM has changed prices on, and luckily for you, I did the work for you.

IBM's price change announcement letters remind me of an old joke I heard when I first started out as a cub reporter nearly 20 years ago. It goes something like this:

A man and his wife are flying to New York City in their own Cessna. The man, an experienced pilot, is trying to land at La Guardia Airport, but he is lost in the fog and his radio doesn't work. He doesn't have radar. He flies around and around until through the fog he spies a tall businessman, clean shaven and dressed in a blue suit with a starched white shirt, with shiny wingtips, standing on the top of a hill that has four avant-guard pyramidal office buildings nearby. The pilot shouts down to the man in the suit, "Where am I?" To which the suit responds, "You're in an airplane." The pilot then turns to the left, does a perfect set of square turns and lands at Westchester County Airport. "How did you do that?" the man's wife asks. "It was easy. That businessman gave me an answer that was technically correct, but perfectly useless, so I knew I was right over Somers at IBM marketing headquarters. The airport is right next to there."

Let me tell you, searching through the online IBM offering catalog fishing out feature code descriptions for the items that have had their prices changed is no easy task. But, I did it so you didn't have to. (For this, I went to college.) I find this work annoying, even if it is necessary, because every single IBM feature for every single product is in a database, and that database is used to kick out the feature descriptions in announcement letters. And that means when IBM changes the prices on features, it could kick out that one extra field and give me back several hours of my life. Moreover, IBM could have more detailed descriptions that actually provide just a little more information on features.

Anyway, here's the scoop on the Power Systems, System p, and System i price changes, as best I can figure. On January 20, IBM raised prices on many features used in these machines by 10 percent or so, and many features had much larger price jumps. The ones that affect i shops include 11 percent increases on PCI IOP adapters and PCI twinax workstation I/O adapters. Prices on RIO-2 (for p products) and HSL (for i products) I/O adapters, for memory cards used on older Power5 and Power5+ machinery bearing i and p labels as well as newer Power System iron, for activating processors on existing machines as well as for buying new Power5+ processor cards, and for certain RAID disk controllers also rose by 10 percent.

You can see a full list of the features that had their prices changed at this link. The announcement letter for these price changes, number 309-758, is available here.

My favorite price increases in this list have to do with IBM's so-called Cool Blue green IT technology. IBM was selling a rack coolant fill and purge tool for $9,000 and this now costs $30,000. (Yes, that is crazy.) Slim rack doors for the back of the rack that have heat exchangers built in used to cost $12,132 but now IBM wants $20,000 for these, and acoustic doors with heat exchangers now cost $21,000 instead of $11,025. A 14-foot section of coolant supply and return hoses costs a whopping $12,500, up from $8,772. Personally, I have a hard time believing any section of hose costs this much, even if it is gold plated.

As you can see from that announcement letter, in addition to the feature price changes, IBM also increased some feature conversion prices relating to processors, memory, and other features. I went through the IBM catalogs to figure out what feature conversions were affected by the price changes, which you can see here. Because of the way IBM does memory on some Power-based servers, requiring you to buy a base memory card and then activating memory on demand that is already on the card, it is hard to say what the memory increase really was. Some memory card feature conversions cost less, but the memory activations cost more. It is my guess that IBM is trying to make it cheaper to move to Power6-based servers by lowering the cost of the card conversions, but is making some of this back by raising the prices for activated memory capacity.

Interestingly, IBM actually raised prices on feature conversions from older Power5+ processors to Power6 processors in 570- and 595-class servers. Prices for converting active processor cores on older Power5+ machines to more modern Power Systems running Power6 chips have also risen. IBM is basically saying that the Power5+ iron is toast. And economically speaking, since some Power6 machines have been in the field for 18 months and others are approaching a year anniversary in early April, this is certainly true.

No matter what you are buying, if you are buying, don't think for a second that resellers and used equipment dealers are not ready and eager to do business. If you don't like IBM's price hikes, see if there is a better deal before you cut your check or issue your purchase order.

In a related announcement, IBM also raised one-time license fees for selected i software on January 20, too. You can see the details on this price hike at this link. (The IBM announcement, letter 309-761, is available here.) Software Maintenance for IBM's HACMP clustering software for both AIX and Linux, as well as Software Maintenance for OS/400 and i5/OS as well as AIX, and support for the Virtual I/O Server also got a price hike, as did the PowerVM Lx86 x86 Linux runtime environment for Power iron that IBM owns because it bought QuickTransit last year. Prices for the PowerVM hypervisor, in its many variants, were also increased by 5 percent.

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