The Four Hundred

IBM, like other IT suppliers, is trying to figure out how to hold revenues while cutting costs, and that is the major reason why the company launched a special Web promotion at its Web store on many iSeries components that customers want to buy. The promotion, which offers a 5 percent discount, is in effect until September 23, which gives IBM enough time to ship the products and book them in the third quarter.

While 5 percent is not a very big discount, it is, considering that IBM already chopped prices on disks and memory features under this Web deal back in late April, when the iSeries Model 890 "Regatta-H" server was announced. Back then, IBM cut the prices of its 17.54 GB (feature 4318) and 35.2 GB (feature 4319) disk drives for iSeries Model 270 and 8XX servers by 30 percent and 24 percent respectively. With the 5 percent discount, the feature 17.54 GB drives, which list for $1,400, sell for $1,330, while the 35.2 GB disks, which list for $2,450, sell for $2,327. I've said it before, and I will say it again: IBM is most definitely feeling the effects of direct competition from BCC Technologies in the iSeries disk market and of indirect competition from Wintel servers. Back in April, IBM chopped the price of the 512 MB and 1 GB memory cards used in iSeries servers by 12.5 percent, and on similar cards used in selected iSeries 8XX models by 20 percent.

In addition to the price cuts on disks for Web buyers, IBM is giving the 5 percent discount on selected memory cards, tape drives, disk controllers, and a DVD drive. The discount is not available across all of these devices, only on certain features on specific iSeries models. (See The Four Hundred's breakdown on features being discounted and their prices before and after the discount.)

In a different promotion running in Europe, IBM has been running a special deal to promote the use of its Domino messaging and groupware software among iSeries customers. We've heard about a special deal in which IBM is giving customers buying a new iSeries machine a free license for the Domino R5 server on one processor, five Notes clients, and five iNotes clients bundled on the machines. This bundle is apparently available for new iSeries Model 270 and 8XX acquisitions, as well as for upgrades to Model 8XX servers. The software was bundled and activated automatically on the machines. IBM Europe has apparently then followed up with customers buying the new machines or upgrades to convince them that they should implement Domino for e-mail and applications, and to get them to buy Passport Advantage services for maintenance and support of the free Domino software, which is worth several thousand dollars at current prices in Europe. Companies buying iSeries machines in the United States, or indeed anywhere else in the world, should demand an equivalent deal from their local IBM division or business partner.

Most IT analysts and sales people believe a recovery in IT spending will not start until the fourth quarter, or maybe not until the new year, and as the year progresses you can expect IBM to offer all kinds of deals like this for short bursts in targeted markets. IBM is testing different deals with different customer sets, and if it hits on something that works, only then will it undertake a more broad marketing change across all the different markets in which the iSeries is sold. We'll keep on top of the deals IBM is pushing in all the geographic regions so you'll know what to demand from IBM as you make your own deal.