Volume 3, Number 17 -- May 4, 2006

Power5+ Delays Force IBM to Cut High-End System p Prices

Published: May 4, 2006

by Timothy Prickett Morgan

With the dual-core Power5+ processors coming in at lower speeds than IBM expected, at least based on roadmaps from a few years ago, and with even the slower chips not yet in the high-end System p AIX-based servers, Big Blue has to do something to keep its competitive position in the Unix market. And so, it has begun cutting prices on its bigger System p 590 and 595 servers and some peripherals used in the machines.

IBM has enjoyed impressive performance gains with its dual-core Power4 and Power5 processors in the past several years, and that has certainly helped get it in the pole position in a Unix server market that used to be dominated by Hewlett-Packard and Sun Microsystems. Because the Power chips and their related server designs have packed such a wallop and both Sun and HP had problematic transitions in their server lines for the past few years, the opportunity was there for IBM to come in and make some big deals and take share away from Sun and HP. And IBM did that. But IBM also did that because it hit its targets in terms of deliveries of new products. And the fact that the Power-based server platform also includes IBM's fairly expensive iSeries proprietary machines--for which there is no easy or compatible alternative for customers who have written COBOL and RPG applications--means IBM can give big discounts on its AIX servers while giving more meager discounts to OS/400 server buyers. It has been a nice ride for IBM.

The Power5+ chips, were supposed to clock above 2.5 GHz to 3 GHz using a 90 nanometer process, and were supposed to be here in late 2005 across all the iSeries and pSeries server lines, which have been rebranded the System i and System p lines. The Power5+ chips came into entry Power servers running at 1.9 GHz, and ran at 2.2 GHz in the midrange i5 570 and p5 570 machines, which scale up to 16 cores in a single system image. IBM has not said why the Power5+ chips have not hit those targets from a few years ago, but two things are possible. First, customers want to keep machines within set thermal limits. Second, IBM can't get the chips to yield at the higher clock speed. Or, it could be both.

All customers know for sure is that it is May 2006 and these updated Power5+ processors for the bigger 32-core p5 590 and 64-core p5 595 are not here yet. It is hard to guess what speed that they will come to market at, but the Power5 chip has been running at 1.9 GHz since it was launched in 2004. It has to be more than that--and 2.5 GHz is a reasonable expectation based on the higher clocks that the denser multichip module (MCM) packaging in the larger Power servers allows compared to entry and midrange machines, which employ fewer chips and much less dense packaging.

With pSeries sales down 9 percent in the first quarter, Sun fielding its first competitive Sparc chips in about six years--the dual-core UltraSparc-IV+ chips--and HP getting traction in its AlphaServer and HP 9000 bases with the Itanium-based Integrity servers, IBM has to do something to appease its largest Unix customers. So this week, it chopped the cost of a base 16-core Power5 processor book used in the p5 590 and 595 servers (with no processors activated) to $32,000, down 65 percent. IBM did not, however, cut the price of activating processor cores. In February, right smack in the middle of the first quarter, IBM actually raised the prices on this processor book from $86,000 to $92,000 and raised the price of activating a 1.9 GHz Power5 core from $21,000 to $22,500. Yes, that is a lot of money for a processor core, but like HP and Sun, IBM is shifting the cost of the system into the processor cores so it can make smaller configurations look less expensive that they would otherwise be. There is no question that a processor core--even a relatively low volume one like the Power5, the UltraSparc-IV+, or the Itanium--costs no more than a few grand to make. Charging an order of magnitude more seems a bit excessive. But as long as the big three Unix players all do it, this practice won't change.

In addition to the Power5 book price cuts, IBM also announced three new 533 MHz DDR2 main memory cards for the available for the p5 590 and p5 595, features that presumably were timed to coincide with the upgrade of the processors to the Power5+ chips. IBM now says that the Power5+ chips will be put in these bigger Unix boxes in the third quarter of 2006. That will be about the same time that HP has dual-core 1.6 GHz Montecito processors running in its "Arches" Integrity servers and when Sun and its partner, Fujitsu, will have the dual-core 2.4 GHz Sparc64 VI+ processors running in the so-called Advanced Product Line. The new memory cards plug into p5 590 and p5 595 machines. Presumably, they offer some performance benefits, since the DDR2 memory cards are running at twice the speed as the older DDR1 cards. They also throw off less heat. But IBM's announcements didn't elaborate on why it was making the change. It costs $2,375 to buy a DDR2 main memory card that has none of the memory activated, and using IBM's capacity on demand features, it costs another $2,376 to turn on a 1 GB chunk; that works out to $2,970 per GB. That's the skinniest card. The fattest DDR2 card has a top end capacity of 512 GB, but costs $240,000 with none of it turned on. (Not a bad price for a glorified motherboard, if you can get it.) It costs $960,000 to activate all the memory on the card, which works out to $2,344 per GB.

The move to memory cards that employ a capacity on demand structure means that IBM can rigidly control the price of memory on its machines. As companies add memory, they no longer unplug less capacious cards and put them on the market. They just turn memory that is always in their machines on. This is also why IBM has to charge so much money for an "empty" card. Customers are, in effect, prepaying for memory they may never use.

Mysteriously, IBM has also announced a new 16-core book for the p5 595, which will be the new base card in that high-end server starting on May 12. IBM did not say what makes it different from the prior books, and as far as I can tell, it is still based on the 1.9 GHz Power5 processor. This new Power5 Turbo book, feature 8969, has exactly the same technical features as the Turbo book it replaces, which is feature 7813. This smells very fishy, mostly because IBM did not offer any explanation. IBM is offering a feature upgrade to allow customers to move from the old Turbo book to the new one. The customer announcement letter did not say it was required, so it may not be anything ominous.

This new feature 8969 Turbo book costs $69,000, which is a lot more expensive than the reduced-price feature 7988 card, which now costs $32,000 but which uses 1.65 GHz Power5 chips instead of the 1.9 GHz ones. But it costs a lot less than the feature 7813 Turbo card, which cost $129,000 after its priced was raised by $2,000 on February 14.


IBM Fleshes Out p5 Line with More Power5+ Processors

IBM Uses Quad-Core Package to Boost Power5+ Performance

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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik,
Shannon O'Donnell, Timothy Prickett Morgan
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