IBM Gets Less Restrictive with Power ISV Rebates

Published: September 14, 2009

by Timothy Prickett Morgan

Well, that deal apparently didn't go down well with the customers. Back at the end of June, IBM announced a rebate deal in conjunction with 88 of its independent software vendor partners who make software that runs on various operating systems on its Power Systems line, and it was so strict about greenfield installations of the software that it has had to back off on that restriction.

I told you all about the original Power Systems First-in-Location Rebate offering here in the July 13 issue of The Four Hundred, which was detailed in announcement letter 309-546. As I explained back then, this deal had a provision whereby the chief executive officer, chief technology officer, chief information officer, chief financial officer, or an equivalent executive had to complete and sign a certificate saying that the particular application (which has to run on a new Power Systems box) has never, in the history of the company, been installed at a particular location of the company. It seems reasonable to assume that someone might have gaming similar deals in the past, but if that was the case, no such deal has ever come to my attention.

Last week, IBM said in announcement letter 309-563 that it has made the definition of "first-in-location" less restrictive. The change is subtle, so you might miss it even after you read the new announcement and the original one (announcement letter 309-546) several times over. But my brain finally processed it on the third try. In the original announcement, IBM was requiring that customers have the Power Systems server installed at a site that had never had any software from the ISV at a particular site, and now the announcement covers "new software application and/or software module from the ISV." This is a minor change in wording, but a huge change in the effect on eligibility for the deal. So now, if you have an ERP system from one of the ISVs and you want to add modules, you can upgrade to or buy a new Power System machine and get the rebate.

The rebates amounts, which are not all that great but are better than nothing, were not changed in the modified deal. On rack and tower machines, the rebate ranged from $2,000 on a Power 520 with two 4.2 GHz cores to $28,000 on a Power 550 with 16 3.6 GHz cores. On larger enterprise boxes, the rebates range from $9,000 on a Power 570 with four to seven 3.5 GHz cores activated to $225,000 on a full-bore, 64-core Power 595 using 5 GHz Power6 chips. Customers buying a four-core JS23 blade get a mere $500 rebate, and an eight-core JS43 gets only $1,000 for the rebate. The rebates are good for machines running i 6.1, AIX 6.1, or Linux, or any combination of the three.

To my thinking, a more reasonable rebate on configured new systems is at least twice this amount. And for customers who are going to two different ISVs for two new stacks of software that they plan to run on logical partitions, side-by-side, on the same (and a bigger and more expensive) Power Systems server, IBM should be willing to give bigger rebates, too. The question is whether or not sales people will be able to.

By my count, the new deal now has 98 software partners, not the 88 of the original deal.

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