IBM Rejiggers System i and BladeCenter Deal One More Time

Published: March 17, 2008

by Timothy Prickett Morgan

If at first you don't exceed your sales targets, try, try again. IBM last week once again tweaked a deal it announced in October 2007 that gave customers buying specific System i configurations a freebie BladeCenter H chassis and two HS21 blade servers, which use Intel's Xeon processors.

In the original deal, customers in the United States who spent at least $150,000 and those in Canada who spent at least $220,000 on a new System i 520, 525, 550, 570, or 595 with at least two iSCSI PCI-X features installed (for linking to blade servers received the BladeCenter chassis) got two blade servers for free; the deal also covered customers who spent that much dough upgrading iSeries 8XX and System i5 5XX machines to new System i 5XX gear. They received the same free blades. The free HS21 blade servers were configured with 2 GB of memory and used dual-core Xeon 5140 processors running at 2.33 GHz.

On November 2, after taking some heat from customers and other parties (including me), IBM came to its senses and realized that the Canadian Looney and the American Greenback were at essentially the same value, so asking Canadian customers to spend more was a little unfair. So it set the minimum purchase limit to be part of the deal to $150,000, U.S. or Canadian. This change was made retroactive to October 2, which seemed fair.

Last week, the deal got a little more complex, forcing customers who buy or upgrade to bigger System i boxes to spend more to get the freebies. Most of the 8XX boxes were also dropped as starting platforms for upgrades, excepting the relatively high-end 870 and 890 machines. (This is because IBM has stopped selling these upgrades.) IBM also changed the configurations on the HS21 blade servers.

To take part in the modified System i and BladeCenter promotion, customers still have to buy two PCI-X iSCSI cards for linking the blades back into the integrated storage in the System i server. And now the amount you spend goes up with the relative performance of the System i server. Customers buying a new System i 520 or 525 server still have to pony up the $150,000 in total spending to participate, but the Canadian companies have to spend $188,000 Canadian, which is about half-way between the gouging IBM tried to do back in October and the fair pricing, based on currency values, it set in the tweaked version of the deal back in November. (Sorry, Canada. Take off, eh?) Now customers who want to get a 550 have to spend at least $300,000 U.S. or $375,000 Canadian, and those wanting a 570 box (Power5, Power5+, or Power6) need to cough up at least $500,000 U.S. or $625,000 Canadian. Customers upgrading to 525 machines have to spend $150,000 in the United States ($188,000 in Canada), those upgrading to 570 box using a Power5 or Power5+ processor have to shell out a minimum of $300,000 ($375,000 Canadian), and those upgrading to a Power6-based 570 have to dole out at least $500,000 in the United States or $625,000 in Canada (and that is in Canadian dollars, which are sadly worth more than American dollars these days).

Basically, IBM wants customers to buy fatter System i boxes to get the extra goodies, and it only cares half as much as it seemed to about currency issues.

IBM did toss in a few goodies, though. The HS1 blade servers are now configured with denser memory chips (although still 2 GB), allowing more room for expansion, and the processors installed have shifted to quad-core 2 GHz Xeon E5405 processors.

What IBM did not do is give a special deal to customers who might want to use the Power6-based JS22 blade server, which supports the i5/OS V6R1 operating that begins shipping Friday. Which seems kinda silly, now don't it? Expect further revisions of this deal, if it survives at all beyond the end of the first quarter. With the economy looking pretty weak, I think IBM is going to have to get a lot more creative--and discount more steeply--to make its numbers. And that is across all product lines, not just the System i.

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