IBM Offers $1 Million Rebates for iSeries High-Availability Servers

by Timothy Prickett Morgan

The IBM eServer iSeries Dedicated High Availability Server Rebate on a Model 840 configuration has the distinction of being the first $1 million rebate I have ever seen from IBM, or indeed from any other server vendor. On Model 820 machines the rebate is $235,000, and on Model 830s it is $450,000. The rebates are available on iSeries Model 820, Model 830, or Model 840 machines that are used as target backup servers for production servers.

Customers participating in this rebate deal cannot just buy any old Model 820, 830, or 840 server to take part in this rebate deal. IBM has very specific yet flexible configurations to meet the needs of a wide variety of high-availability-server capacity needs. As you can see from our pricing table, each of the three iSeries servers has a number of different options, in terms of processors, interactive features, and disk capacity. The relative generosity of IBM's rebates, therefore, depends on what size of configuration you need to buy for the backup machine in your high-availability cluster, which will, of course, be determined by the transaction load that you need to support with your core applications, in the event that you have an outage or a planned downtime with your production machine. It may seem unfair that customers installing high-availability software have to buy those expensive interactive features for an auxiliary machine that is just sitting there journaling transactions and replicating files and not really doing any useful work. I mean, it costs millions of dollars for some of these machines, which is a hefty check to write for a mirrored server. (It would be nice of there were something called "high-availability-on-demand pricing," which means a target iSeries machine that was just sitting around doing nothing would cost next to nothing when it was just journaling and replicating, and would cost what was appropriate when it had taken over and was doing real production work.)

To figure out how good of a deal this high-availability rebate is, you also need to know the pricing on the three-year prepaid Software Subscription for these iSeries servers and on IBM's Backup, Recovery and Media Services software, both of which are required in order to get the rebates. We've given you all of the relevant pricing information for the hardware configuration, as well as the cost of the Software Subscription and BRMS licenses, so you can figure out how much of a discount these rebates amount to.

I'll run through an example, just to give you a sense of these discounts. Let's take the smallest Model 820 target configuration. The base Model 820 server costs $10,000. The feature 2437 processor, rated at 2,350 CPWs, costs $145,000. The two-dozen 17.54 GB disks in the smallest Model 820 configuration available under this deal cost $33,600, and the 4 GB of main memory costs $32,768. The 560 CPM feature 1525 interactive card costs $315,000. Then you have to add to this the cost of the BRMS software, which comes to $12,600 with the base and advanced features. Assuming that customers should be buying Software Subscription in the first place--and particularly now, because IBM will increase prices for Software Subscription in July--the cost of Software Subscription cannot really, in fairness, be added to the base configuration for the purpose of calculating the effective discount for the deal; it comes to $78,884 in this particular case, so it is a substantial amount of money. In any event, when you add it all up, it comes to $548,968 for that Model 820 configuration. A $235,000 rebate amounts to a discount of 42.7 percent. Now, as customers add more interactive capacity, that effective discount diminishes. Installing the feature 2438 processor, rated at 3,700 CPWs, and the 2,000 CPW interactive feature on this Model 820, and switching to two-dozen 35.2 GB disks, brings the cost of the biggest Model 820 configuration to $1,168,368. That $235,000 rebate comes to an effective discount of 20.1 percent. That's still pretty decent--better than the five to 10 percent discounts IBM usually gives in special iSeries deals.

Under this rebate, which is available in North America, customers have to install high-availability solutions from DataMirror, Lakeview Technology, or Vision Solutions. The target machine in the high-availability cluster has to have a CPW rating that is greater than 50 percent of the CPW rating of the production system. This rebate deal does not cover companies mirroring across partitions in a single machine; it does not cover customers who already have a portion of a high-availability solution already installed and are building out their suites.

IBM is also requiring that customers participating in this rebate install Performance Management/400 on the Model 8XX server continuously so that IBM can monitor that the machine is not being used to do production work except for eligible downtime. There are apparently some guidelines to how much capacity customers can use on these machines, but the details on these limits were not available at press time. It is unclear if IBM is actually metering the usage on these servers--in other words, only preventing a certain amount of time or capacity to be used over a certain term. IBM obviously doesn't want any shenanigans, and wants customers who are using production machines to pay production prices.

The more I think about it, the more I think this marketing approach could open up a whole new way to sell clusters. But I want some time to think about it and talk to IBM before I share my thoughts with you.