IBM Cuts Prices on Memory, Disk, and Selected iSeries Servers

by Timothy Prickett Morgan

When I spoke to Buell Duncan, general manager of the MidMarket Server Division, at COMMON two weeks ago, he said that IBM knew that it needed to make some price changes to reach parity with other server products, and said that he was committed that iSeries memory and disk prices would more or less stay in parity with the pSeries Unix server line. I haven't had time to check on that yet, but I did have time to hunt down the various price changes that will be announced this week.

First, the memory prices change. IBM has cut the cost of the 512 MB and 1 GB memory cards used in the Model 270 line by 12.5 percent. The cost of the 512 MB memory card for the Model 270 drops to $1,792 from $2,048, and the cost of the 1 GB memory card drops to $3,584 from $4,096. For the Model 820 and Model 830 servers, IBM has dropped the prices on the 512 MB and 1 GB memory features used in these as well. (The cards are actually distinct, which is why IBM charges different prices for them.) The price of the 512 MB card for the 820s and 840s has dropped to $4,096, down 20 percent from $5,120. The price of the 1 GB card for these machines dropped to $8,192, down 20 percent from $10,240. Prices of less capacious memory cards in the iSeries line remain unchanged. Also, prices for Model 840 machines remain the same. The new iSeries Regatta Model 890 server uses completely different memory cards, and no one knows yet what IBM will charge for them.

On the disk drive front, IBM has cut the prices of its 17.54 GB and 35.2 GB disk drive features for iSeries Model 270 and 8XX servers. IBM is feeling the effects of direct competition from BCC Technologies in the iSeries disk market and of indirect competition from its own xSeries Wintel servers and those of other vendors, and knows that it has to react with price cuts on disk drives to remain competitive. IBM is now charging $1,400 for its 17.54 GB, 10K RPM disk features. This is the same price that IBM will still charge for its 8.58 GB, 10K RPM disk features, which will soon be withdrawn from IBM's catalog. This price drop effectively kills the older 8.58 GB drives. (Those 17.54 GB drives can be used in Model 170 and 7XX servers as well.) IBM also slashed the prices it is charging for the new 35.2 GB disks, dropping the price to $2,450, down 24 percent from the $3,200 it was asking when these units were first announced, in February.

To help meet the needs of customers who want to run Domino and Linux on peppier but less costly Model 270 servers that also have a pretty significant amount of interactive performance, IBM slashed the prices it is charging for selected interactive features on Model 270-2432 uniprocessor and Model 270-2434 dual- processor S-Star servers. Customers wanting to buy an inexpensive Model 270, say sources at IBM, often pick the Model 270-2248, which has a 400 MHz Pulsar processor with no L2 cache memory, or the Model 270-2431, which has a 540 MHz S-Star processor with no L2 cache. Having L2 cache is important for modern workloads like Java, Domino, and WebSphere, but the machines that have these bigger L2 caches also have interactive features that drive up the cost of the servers to levels that make them too expensive when compared with non-iSeries alternatives. Rather than tweak the Model 270 hardware to come up with different processor performance points, IBM has simply decided to cut the price of the interactive hardware features on Model 270 servers that are more powerful than the 270-2248 and 270-2431 machines.

Specifically, IBM has cut the price of the feature 1519 interactive feature on the Model 270-2432 by 43 percent, from $56,300 to $32,300; this drops the price of the configured machine from $67,000 to $43,000. Similarly, IBM has cut the price of the feature 1520 interactive feature on the Model 270-2434 by 53 percent, from $112,500 to $52,500. This drops the price of a base 270-2434 from $139,000 to $79,000. These are big price cuts for IBM.

In the Model 820 line, IBM has slashed the prices of processor features used in the machines by between 55 and 71 percent, which has the effect of cutting the cost of these machines in half when you add in the price of the iSeries 820 towers and base features. The price of an 820-0150, which has a single 600 MHz S- Star processor and 2 MB of L2 cache, was slashed to $20,000, down from $44,000. The price of the 820- 0151, which is a two-way machine with 4 MB of L2 cache per processor, was cut to $34,000, down from $77,500. And the price of the four-way 820, which uses the same 600 MHz S-Star chip and 4 MB of L2 cache per processor, was cut in half to $60,000, down from $120,000.

When you combine the cuts in the prices for processors, interactive features, memory, and disk, IBM has made some progress in keeping the entry and midrange iSeries servers in line with the Wintel, Lintel, and Unix competition. Just how much progress is something I will be looking at in a future edition of The Four Hundred.