OS/400 Edition
Volume 11, Number 27 -- July 15, 2002

IBM to Sell Entry iSeries Servers at Half Price

by Timothy Prickett Morgan

The word on the street is that IBM is getting ready to chop prices on some of its entry iSeries models in an effort to get customers with aging AS/400 iron to move on up to iSeries hardware. According to sources familiar with Big Blue's plans, the MidMarket Server Division has put together a marketing plan called "Operation Green Streak," which will offer two entry iSeries models to new and existing OS/400 customers with a discount in the range of 50 percent.

By any standard, this is a big discount, and by IBM's standards in the AS/400 and iSeries market, this is a tremendous discount. The iSeries platform has had a rough time in recent quarters, mainly because midrange manufacturers and distributors, the biggest buyers of iSeries iron, have been hammered the world over by weak economic conditions and are hesitant to invest in new computing equipment unless. Such a price break might get a lot of companies using AS/400 servers that are generations behind to move to modern hardware. This promotion, as the name suggests, is specifically targeted at easing the cost of server modernization for companies that predominantly use green-screen applications, although the iSeries servers offered under Operation Green Streak will reportedly be full-blown iSeries machines that can support Java, Domino, and other modern applications, too.

According to sources, IBM will offer a 50 percent discount--this number could be a little higher or lower--on the iSeries Model 270-2432 with the 1519 interactive feature card installed, and on the Model 820-2436 with the 1519 interactive feature card installed. Before the discount, that Model 270 machine has a list price of $67,000 and includes a 540 MHz S-Star processor with 2 MB of L2 cache memory, 256 MB of memory (expandable to 8 GB), and a 17.54 GB disk drive; this server is rated at 1,070 CPWs of raw power and has 50 CPWs of interactive power activated. The Model 820 machine has a 600 MHz S-Star processor with 2 MB of L2 cache, 256 MB of memory (expandable to 16 GB), and a 17.54 GB disk drive. Before the Green Streak deal, this Model 820 server had a list price of $105,000. The Model 820 under the deal is rated at 1,100 CPWs of raw power and has 70 CPWs activated for green-screen workloads.

Machines acquired under the deal will come with OS/400 V5R1, and they will be able to support V5R2 when it becomes available at the end of August. Customers with OS/400 V4R4 and OS/400 V4R5 will have a relatively easy time upgrading to the new machines because of the similarity of these releases to OS/400 V5R1. Those with older OS/400 releases are going to have to do a little planning to get current.

IBM will reportedly offer discounts on OS/400 systems software and middleware associated with the Green Streak promotion, although these discounts are not expected to be as large as those on the hardware. Similarly, IBM is expected to offer price breaks on Software Subscription service for these servers, to make the machines more appealing to vintage AS/400 users. The Green Streak promotion will be available worldwide. However, in different geographies, the deal may also include discounts on application software and education and training services.

The Green Streak promotion is expected to last through the end of the year, when prices for these Model 270 and 820 machines will, presumably, revert to higher levels. IBM is expected to offer steeper discounts immediately on software and subscription services that are acquired in the third quarter, which may be a tough one for Big Blue. In the fourth quarter, these discounts on software and subscription services won't be as deep, although the hardware discounts will remain at 50 percent. Customers taking part in this deal do not have to turn in their old AS/400s to get the new iSeries iron, and customers don't even need to be existing AS/400 customers to get the big discounts. It's a come one, come all kind of deal, which is my favorite kind.

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Timothy Prickett Morgan

Managing Editor
Shannon Pastore

Contributing Editors:
Dan Burger
Joe Hertvik
Kevin Vandever
Shannon O'Donnell
Victor Rozek
Hesh Wiener
Alex Woodie

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Last Updated: 7/15/02
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