IBM Slashes Prices on Power Core Activations

Published: November 2, 2009

by Timothy Prickett Morgan

The U.S. economy may look like it is coming out of the Great Recession, at least according to the economists who work for Uncle Sam, who said last Thursday that gross domestic product in the States rose by a 3.5 annualized rate in the third quarter. That is better than the 2.7, 5.4, 6.4, and 0.70 percent declines that mark the trough of the Great Recession in the prior four quarters, for sure. But very few people--including economists and server makers--think the recession is really over. And hence, they wheel and deal.

Just like IBM is doing with the--inhale now--Power Systems capacity upgrade on demand processor activation discount promotion. As explained in announcement letter 309-573, the deal is not for customers buying new systems, but rather for customers who have existing Power-based servers with dormant processing capacity in them. If your System p, System i, or Power Systems machine was not in place and running on October 27, you can't get the discount.

Under the discount promotion, the capacity upgrade on demand (CUoD) activation of processors is only available on specific machines with specific processor cards installed. On the older System i product line, which predates the merging of the System p and i product lines in April 2008, the customers that have sleeping 1.65 GHz Power5 and 1.9 GHz Power5+ cores in their System i5 550 midrange boxes can get a 30 percent discount on core activations. Ditto for System i5 570 shops with 1.65 GHz Power5 or 2.2 GHz Power5+ cores that are turned on. System i5 595 high-end machines using 1.65 GHz or 1.9 GHz Power5 processors or 2.3 GHz Power5+ cores can activate cores with a 30 percent discount. Discounts on the System i 570 using the Power6 processors were larger, at 60 percent off list price for machines using those 4.7 GHz cores.

Now, here is where i/OS shops should start to get a little bit annoyed. The System p customers activating cores on their installed machines are getting deeper discounts on some of the iron as well as getting discounts on a wider variety of processor types and clock speeds. However, in a few cases, the discounts are deeper on the i boxes. You didn't know it, but apparently the Power Systems family is Irish, and the i/OS people have to cough up more table money for the family to pay the bills. It has been like this since 1989 as far as I can tell, even though the AIX business now dwarfs the i/OS business at IBM.

On the System p5 570 machines using 1.65 GHz Power5 or 1.9 GHz Power5+ cores and 1.9 GHz or 2.2 GHz Power5+ cores, the AIX and Linux shops get a 60 percent discount on latent core activations. On System p5 590s (there is no analog in the i lineup), machines with 1.65 GHz Power5 and 2.1 GHz Power5+ cores get a 60 percent discount, too, as do the 1.65 GHz and 1.9 GHz Power5 and 1.9 GHz, 2.1 GHz, and 2.3 GHz Power5+ cores in the System p5 595.

For Power 570 machines using Power6 family of chips, IBM is giving a 45 percent discount to customers who activate 3.5 GHz, 4.2 GHz, and 4.7 GHz Power6 chips, and 4.2 GHz, 4.4 GHz, and 5 GHz Power6+ chips get that same 45 percent haircut, too.

IBM has its reasons for doing what it does, and the Power Systems division is obviously under some pressure from the higher-ups at Big Blue HQ to maximize revenues and profits while stimulating demand with some price breaks. This is probably why IBM didn't just give the System i and System p folks the same rebates. That said, I think that a System i or System p shop should demand the higher of any two discounts are part of their deal. This is real money. And considering that IBM has no work to do and has very likely already accounted for the manufacturing cost of those processor cores, it is really just pure profit for Big Blue. And in this economy, where maybe only IBM is the happy camper throwing off billions of dollars in profits each quarter, it is Big Blue's time to give a little.

This Power Systems core activation deal runs through December 29, and after that, core activations will go back to their normal prices.

IBM last week also put out another deal, this one aimed specifically and only at Power System 550 customers, giving customers who buy a new machine a free license to the PowerVM Enterprise Edition hypervisor for the box for free. (See announcement letter 309-574.)

The PowerVM hypervisor (program product 5765-PVE) sells for $2,099 per core on this box. IBM did not offer freebie licenses to PowerVM Standard Edition, which costs $1,376 per core on this same machine. And other Power 520, Power 570, and Power 595 machinery also did not get a freebie PowerVM hypervisor, either. (Well, other than the PowerVM Express Edition, which is already free but which is missing key features that enterprises need to make logical partitioning useful.)

It is not clear why only the Power 550 is getting a free license for PowerVM. It might have something to do with the Power 550 being at the heart of several different database clustering configurations, including the Smart Analytics System (for analytics) and the DB2 PureScale (for online transaction processing) coming out of the AIX side of the Power Systems house.

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