IBM Cuts User Prices on User-Based CBU Editions

Published: September 24, 2007

by Timothy Prickett Morgan

There hasn't been a lot of announcement activity from IBM in recent weeks on the System i front, but I did want to alert you to the fact that the company did trim two prices on user-based software access on its new Capacity BackUp (CBU) editions.

Specifically, IBM cut prices on user activations for 10 users on i5/OS on the CBU based on the i5 525 from $2,000 to $1,000; this is i5/OS (5722-SSC for user-based licensing, feature code 1602). IBM also cut the price to convert a base user-priced i5 525 CBU to an unlimited number of users in half, from $30,000 to $15,000. As is IBM's custom when it comes to price cuts or hikes, it gave no explanation for its move. But it seems reasonable to assume that customers and resellers who were trying to peddle i5 525 CBU boxes were running into some resistance on pricing.

Back in May, IBM tweaked the user-based pricing methodology it created for the i5 515 and 525 machines. When the machines originally launched in April, IBM counted the number of authenticated users on the system and charged $250 a pop to activate each user. After a lot of feedback from customers that have plenty of occasional users, many of whom work on shifts in factories and call centers, IBM switched to a concurrent way of counting users. This substantially cut the cost of adding users to these new machines for all customers. Then, in July, IBM announced that it was removing the 40-user cap it artificially placed on the i5 515 box, which was an obvious move to try to get customers with more than about 20 users to buy the more expensive i5 525. This change was restricted to the Americas region--or that was the party line, at least. I don't believe it for one nanosecond.

By switching to maximum concurrent user licensing and removing the cap on the i5 515, i5/OS has at least one advantage over Windows, which has per-user licensing. However, the cost of adding an i5/OS user is $250, which is a lot more expensive than a Windows Client Access License. Still, over a large number of users, i5/OS and Windows can come out close to the same price--which is a step in the right direction.

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