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Volume 20, Number 31 -- September 19, 2011

European Power Deal Tweaked, Zero Percent Financing Down Under

Published: September 19, 2011

by Timothy Prickett Morgan

The Power Systems business is humming along relative to other Unix and proprietary platforms, but success for IBM is measured relative to itself, quarter-on-quarter and year-on-year and at the bottom line. And thus Big Blue has doubled down on a Power Systems rebated deal designed to get European companies off old iron and onto new, as well as offering financing deals across its server and storage line in Australia and New Zealand to attract some business.

Under the 2011 Power Trade In Program NE IOT, IBM is offering customers who have old RS64, PowerPC, Power2, Power3, Power4, Power4, Power5, Power5+, and Power6 servers rebates if they move to Power7-based Power Systems 710, 720, 730, and 740 machines in Express configurations. The deal, which dates from January of this year, is only available in Northern Europe--that's the NE IOT abbreviation in the name of the deal, which covers Austria, Switzerland, Liechtenstein, Germany, Denmark, Greenland, Sweden, Norway, Finland, Iceland, Ireland, and the United Kingdom. The deal announced in April gave customers trading in old Power machines running AIX or Linux a $1,500 rebate (that's in U.S. dollars), and those trading in machines running OS/400 and i5/OS a $3,000 rebate.

In announcement letter ENUSZA11-1003, IBM has doubled-stuffed the rebates to $3,000 for turned-in AIX and Linux boxes and $6,000 for OS/400 and i5/OS boxes. This double rebate is available for customers except those using Power6-based servers; they only get the regular Oreo rebates. While the rebates are set in U.S. dollars, they are paid in local currencies at the prevailing exchange rates when the deal is closed. IBM says the rebate can be used to offset the acquisition of new gear, and that is just a funny way of saying that IBM's sales reps can say they didn't cut price to do the deal but that their cost of sales went up, thus keeping IBM's top line artificially high. (That's why car companies and all major electronics suppliers give rebates, not price cuts, unless they really have to.)

I have never seen this deal before, but I have to say, kudos to Big Blue for giving the IBM i shops a better deal. They pay more for their systems, so why shouldn't they be rewarded for their loyalty more?

In the United States back in June, IBM revived a long-running, off-again, on-again trade-in deal for Power Systems customers who are buying new Power6, Power6+, or Power7 machines as they dump their old gear. Trade-in rebates range from a pathetic $250 to a more reasonable $8,000, depending on the configuration of both the replaced machine and the machine customers buy.

Zed interest Down Under

IBM must be getting worried about business in Australia and New Zealand lately, too, because on System x and BladeCenter servers and various storage arrays, IBM is offering interest free financing for 12 months.

Under the deal, which is announcement letter A311-113 in Australia and NZ311-113 in New Zealand, IBM is letting customers take the cost of their systems, divide by 12, and pay that on a monthly basis without having to pay Big Blue any interest. If you want to lease the equipment instead of buying it, IBM is willing to forgo the first year of interest on the lease, but you have to pay interest on the remaining two years in a three-year lease.

Only last week, The Four Hundred told you about a killer discount that Aussies and Kiwis were getting on a new Power 720 machine--but it had to be configured with Linux. You can predict with 100 percent accuracy what I think about that. If a deal is good enough for AIX, it is even better for IBM i.


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