The System i Gets Price Changes and Withdrawals

Published: August 20, 2007

by Timothy Prickett Morgan

The prelude to a new hardware platform and operating system release is often a time when server makers start rejiggering their prices and giving customers the head's up that upgrades from older technology to relatively new equipment (soon to be displaced, however) are going to be removed from the product catalog at some future date. And so it is with the System i product line this summer.

As part of the July 30 announcement letter blitz, IBM changed prices on a slew of iSeries and System i components as well as warned customers that certain hardware and software features would be withdrawn from marketing.

On the price change front, IBM has--once again--made it difficult in its letters to figure out exactly what components have seen price changes. The announcement letters are just columns of feature numbers, old prices, and new prices, which is not really all that helpful. I am, however, helpful. So I have figured out what the price changes are for you. (If you want to see the full hardware price change list, follow this link.

On the hardware front, concurrent with disk price cuts also announced on July 30, IBM has chopped the price on 150 of its 70.56 GB, 15K RPM disk drives from $299,850 to $149,850, a 50 percent price cut. Ditto for the 150-pack of 141.12 GB 15K RPM disks, which now costs $269,850, representing a 36 percent price cut.

For high-end System i customers, IBM cut the price on base System i5 595 servers running Standard Edition or Enterprise Edition--which have not been eradicated as they were on the new Power6-based 570-class server--and built on the 2.3 GHz Power5+ processors by between 5.4 percent and 16.3 percent. In general, the larger the processing capacity of the 595 box, the deeper the price cut. Upgrades from prior generations of big iSeries boxes were also cut in parallel to the price cuts on the new 595 boxes.

As for software, IBM increased the price of its Job Scheduler for iSeries program (5722-JS1), which works in conjunction with the iSeries Navigator management tool to schedule jobs on OS/400 and i5/OS servers. Previously, Job Scheduler cost from $600 on a machine in the P05 software tier to $18,060 on a machine in the P60 tier. Those prices now range from $1,000 to $30,000 without any new functionality added--a price increase of between 64 percent and 67 percent, depending on the tier. This price change went into effect on July 31, but IBM's online store has not yet changed the price, so my advice is that if you need this software, shop online.

Which brings us to product withdrawals. On July 31, IBM killed off a bunch of features in the old iSeries line, including a 141.12 GB, 15K RPM disk for iSeries 8XX machines and a mirrored 70 GB disk/controller bundle that IBM has sold for some time on older iSeries kit. The 32 GB main storage card based on DDR1 main memory technology for the i5 595 server was also killed off.

On December 1, IBM will stop selling the 1.9 GHz Power5 processor features in the i5 595 as well as upgrades to these processors from prior generations of 595-class or smaller iSeries servers. Customers will have to buy faster i5 595 servers based on the 2.3 GHz Power5+ processor. A number of other processor upgrades from Power5 to Power5+ processors are also being removed from marketing on November 1.

IBM really wants some i5/OS and OS/400 shops to buy the new Power6-based System i 570 server, which was announced in July, and to help get some customers moving, it is removing upgrades from iSeries 825 machines to the Power6 box on December 1 as well, and customers with iSeries 870 or 890 boxes, who are arguably the most appropriate buyers for the new System i 570, have only until April 1, 2008, to buy that upgrade. (That is no April Fool's joke, people.)

I still think that IBM had originally planned for the new Power6-based System i line to be to market now, and I think the original plan was to get what is now called V6R1 to market earlier this year, too. I am surprised that IBM has not announced a price cut on new i5 iron to pump up sales as well as an increase in maintenance prices on older gear and upgrade prices from older gear to Power5+ iron to help it make some sales between now and early 2008, when new iron and V6R1 should be here. IBM has not said anything firm about new Power6 iron, and has only publicly committed to having V6R1 ready for market in the first half of 2008. The rumor mill suggests that February is the target--or at least, the most recent rumor.

The fact is, IBM has offered a lot more flexibility in pricing for i5/OS systems compared to earlier OS/400 machines, but the price of computing power for 5250 workloads, as I have shown in prior editions of this newsletter, has not really come down a lot for heavily configured machines. In the past, IBM cut AS/400 prices to stimulate demand as the market awaited new products, mostly because customers expected not only a bump in performance, but lower per-unit costs for performance. This is not a tactic that Big Blue will take today in the System i market because it wants every penny it can squeeze from customers. I happen to think this is a wrong approach, but in an inflationary world, even holding prices steady is a bit of an accomplishment. (I say this as the president of a company that has not raised prices for advertising for six years now, and I can assure you, my company's costs have gone up. I have just eliminated the costs of having others do our IT for us and learned a thing or two along the way.)

At least the cost of capacity for the System i line is not likely to go up in the future. And if it does, there will be plenty of wailing and gnashing of teeth. Of this, you can be certain.

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