IBM Cuts Deals to Push pSeries Ahead of Squadron Launch

by Timothy Prickett Morgan

With the Power5-based "Squadron" servers bearing the eServer p5 label due from IBM in late July or early August, Big Blue has to do something to keep the wheels of commerce turning in its Unix server business. Price cuts and deals are the tried-and-true way to do this, and this is exactly what IBM is doing as it tries to close out its second quarter with yet more market share gains.

First of all, IBM is offering a rebate promotion for customers who buy a pSeries 615 (two-way), a pSeries 630 (more capacious two-way), or a pSeries 650 (four-way) Power4-based server between now and June 30. The rebates range from $1,500 or $2,000 on a pSeries 615, to $4,000 on a pSeries 630, to $11,000 on a pSeries 650, and this shaves a few points off the cost of one of these boxes. The discounts are only applied to so-called pSeries Express configurations, which have enough memory and disk to support real workloads, as opposed to base machines, which generally do not.

IBM also has cut the price on its 4 GB (feature 4182) and 8 GB (feature 4197) memory cards for the pSeries 690 essentially in half. Prices for the 8 GB card are now $14,336, cut by 50 percent, while the price on the 4 GB card is now $8,602, down 40 percent. IBM also a few weeks ago cut the cost of disk drives used across the pSeries line by 18 to 19 percent; a 36 GB, 15K RPM disk now has a list price of $2,125, while a 73 GB, 15K RPM disk now costs $3,258. (For some reason, customers buying older RS/6000 S-Star servers can get disk capacity about 17 percent cheaper than those prices, compared with those buying newer Power4-based machines, even after the price cuts. Go figure.) The company cut the cost of upgrading the Level 3 cache memory used in the Power servers by 15 percent (still $13,750 to move from 400 MHz to 500 MHz per 128 MB, though), and also cut several memory upgrade paths by as much as 20 percent. IBM has also slashed the costs of its GTX graphics cards and its IntelliStation Model 275 Power4-based workstation by roughly 30 percent.

In another deal, IBM announced that it is giving a 65 percent price break on the activation fees for latent memory and processors in Power4-based pSeries 670 and pSeries 690 servers. Customers have the option of buying these servers with "capacity on demand" memory or processors waiting to be turned on when needed. Under this promotion, which ends June 30, customers can activate processors or memory for 35 percent off list price. This is a whopping price break, and it is the best indicator of the price/performance levels that IBM will set with the future eServer p5 kickers to the pSeries. For processors, IBM has promised to keep its eServer i5 (iSeries) and eServer p5 (pSeries) prices in lock step, and it is currently charging only $4,500 to activate a Power5 processor core on the i5 machines.

Ironically, IBM has killed off a long-running RS/6000 trade-in program that for the past four years has offered customers with older IBM Unix gear trade-ins (cash, not a rebate or a discount) if they upgraded to more modern AIX gear. Over time, the trade-ins have ranged from a few thousand bucks on small machines to nearly $100,000 on big boxes. The withdrawal of this trade-in promotion is probably only temporary, however. IBM has a habit of killing these upgrade deals only to bring them back from the dead as a new product line rolls out.