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Volume 20, Number 9 -- March 7, 2011

Global Financing Offers Power5/5+ Takeouts to Power6/6+ Buyers

Published: March 7, 2011

by Timothy Prickett Morgan

Does IBM want to sell you a shiny new Power7 to replace your old Power5 or Power5+ server and get you to move up to IBM i 7.1, or does it want to sell you a Power6 or Power6+ box instead because these machines support i5/OS V5R4? The answer, as it turns out, is exactly what you would expect from Big Blue or any other IT supplier. IBM wants to sell you whatever you will pay to buy for whatever reason you think you have.

As The Four Hundred has been reporting for the past several weeks, IBM is offering a bunch of different carrots and sticks to get the base of Power5 through Power6+ server customers, particularly those on that old i5/OS V5R4 release, to get modern and move up to new iron and software. But last week, IBM's Global Financing unit, which sells previously owner systems (presumably sprayed with some chemicals that make them smell like a new server), announced a deal that seeks to get customers with older Power5 and Power5+ systems to take a second hand Power6 or Power6+ system instead.

It looks like this deal is aimed at the upgrade holdouts that, for whatever reason, are not able to do the program conversion from i5/OS V5R4 to i 6.1 or i 7.1. In some cases, these midrange shops don't have the resources to do the conversion or the money to pay someone else to do it. In others, moving to any newer IBM iron will force them to move to a machine with a higher OS/400 and i software tier, forcing them to pay extra software upgrade fees even though they are not adding any more users to their systems or doing any more work with that software. In still other cases, ISVs have not done the program conversion, the source code to do it is no longer available for the code, or customers are using programs that are so old that the ISV is not going to move that code ahead but rather require them to upgrade to newer ISV code--a hassle in its own right.

In announcement letter 311-030, IBM Global Financing is offering cash on the barrel head for older Power5 and Power5+ iron if you buy "IBM Certified Pre-Owned Equipment," which the company abbreviates ICPE. IBM says that these takeouts are "promotional prices" and that is no doubt aimed at giving the impression that these prices are good ones, but I would not take Global Financing's word for it. If you are actually a Power5 or Power5+ shop and you want to move to a Power6 or Power6+ machine, do your due diligence and talk to some third party equipment dealers. Or, at the very least, do the deal with Global Financing for only the base bones Power5 or Power5+ box going back to Big Blue and keep the features to sell them to a third party dealer. In a lot of cases, the memory, disk, and peripheral features in an older machine are worth more, in aggregate, than the base server itself.

Here's what the takeouts look like on the deal from IBM:


New Box Old Box Takeout
Power6/6+ Power5/5+ Price
9119-FHA 9119-595 $75,000
9119-590 $35,000
9406-595 $75,000
9117-MMA 9117-570 $7,500
9406-570 $5,000
9406-MMA $7,500
8204-E8A 9131-52A $1,250
9133-55A $1,250
9406-550 $4,500
8203-E4A 9111-520 $1,000
9110-510 $1,000
9110-51A $750
9406-525 $3,500
9406-520 $3,000

To take part in this deal, you have to acquire a used Power6 or Power6+ server from Global Financing, and you can only do one-for-one machine replacements. (Although, if you want to consolidate a bunch of older boxes onto a larger Power6/6+ machine, I am sure IBM will be willing to work a deal.) You have to buy the used Power6 or Power6+ box by June 30, 2011, and it only applied to deals on or after March 3. Sorry, if you did a deal in January or February, you get nadda. Customers upgrading leased machines that are owned by Global Services can participate in the deal, by the way. Those modifying a lease have until July 15 to get the deal done. You have to turn in the old Power5 or Power5+ iron by August 30.


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