Volume 19, Number 31 -- September 7, 2010

Entry IBM i Server Deals Greased With License Discounts

Published: September 7, 2010

by Timothy Prickett Morgan

As this newsletter reported a month ago, IBM has been cutting deals with customers moving from older Power 550 and larger machines based on Power 5, Power5+, and Power6 processors to Power 550/750 machines based on Power6+ and Power7 processors. The deal allows IBM i software licenses bought above and beyond the base OS that is configured with the server to slide from the old to the new box for a modest fee. Now, Big Blue is cutting smaller IBM i shops a break, too.

The deal, called the IBM i License By User offering, is detailed in announcement letter 310-241, which the company slipped out in the wake of the August 17 Power Systems announcements. (That was when the four entry servers, the Power 710, 720, 730, and 740 servers as well as the new big bad box, the Power 795, were launched.) Under that deal, IBM is giving customers that have user-based pricing for the IBM i operating system--meaning Power 520-class systems, Power-based blade servers (old and new), and the new Power 710 and 720 machines--a 40 percent discount off the price of software licenses.

The 40 percent discount can be taken by customers who are buying whole new boxes or upgrading to newer machines from older boxes. Presumably the discount also applies to incremental licenses added to new or upgraded iron. The discounts apply to both per-user fees sold in five- or 10-user blocks for specific machines, or the unlimited user licenses that IBM offers for these machines. (Effectively converting per-user licenses to tiered licenses as are sold on larger Power Systems.) The only upgrade supported under this deal is the move from the Power6+ Power 520 (product number 9203-E4A) to the Power 720 (product number 8202-E4B).

On the Power 520 Express server, for instance, it costs $250 per user to fire up i 6.1, i 6.1.1, and i 7.1 licenses on the single-core Power6 machine. Buying unlimited users on this box costs $18,750, which works out to 75 users. If you are adding 75 users to a machine, it makes sense to just buy the unlimited license. With the 40 percent discount announced on August 18, that cross-over point is now 45 users--$11,250, which is $18,750 times 0.6, divided by $250 per user in the pre-deal pricing. On two-core Power Systems rack and tower machines, an unlimited IBM i license on user-based machines is $50,000, and on four-core machines it is $75,000. On the JS12 and PS700 Power blade servers, unlimited IBM i licenses cost $18,750. On the other Power blades--the single-socket PS701 and the two-socket JS22, JS23/JS43, and PS702--an unlimited license for the machine costs $50,000.

None of the charges mentioned above include the IBM i per core activation fees, which are $2,245 on the entry Power 520 (single-core), Power 710, Power 720, JS12, and PS700 machines. On all of the other machines in the entry Power Systems lineup, the per-core activation fee for the three relevant IBM i releases is $14,995 per core. On Express configurations, IBM cuts the price in half on the base processor hardware activations and tosses in a set number of core activations for IBM i. (It varies depending on the machine.)

The point is, you need to do your capacity planning for IBM i carefully. For a lot of customers, particularly those on P20-class machines, it may be so much cheaper to get down to a P05 or P10 machine using Power7 processors. The extra hardware cost (at street, not list, price) could be more than covered by the reduction in IBM i license costs even before the 40 percent discount on user activation fees for the operating system and integrated database.


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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Brian Kelly, Shannon O'Donnell,
Mary Lou Roberts, Victor Rozek, Kevin Vandever, Hesh Wiener, Alex Woodie
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Advertising Sales Representative: Kim Reed
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