Volume 4, Number 20 -- May 31, 2007

IBM Tries Online Discounts to Move Server, Storage Gear

Published: May 31, 2007

by Timothy Prickett Morgan

There is always a tension between direct sales and indirect sales among IT vendors, and it is a difficult tightrope to walk. Not every acquisition by an IT manager should involve a lot of human interaction, particularly now that the Web is a decade old and people are well accustomed to buying stuff online. IBM had not often given customers big discounts on servers and other gear when bought through its online store or through its telesales operations--the two are actually linked as one these days--but under a deal announced this week, Big Blue is giving it a try.

The ibm.com store is now offering customers who go to the Web and buy various new and used servers and related storage products a 10 percent discount over and above the Web price of the gear, which is often discounted from official list prices for the hardware. The Buy More, Get More Value discount deal, announced on Tuesday, offers discounts on all of the current System p Power5, Power5+, and Power6 servers (which run AIX and often Linux and rarely i5/OS) from the p5 505 entry rack server all the way up to a p5 595 enterprise-class server; customers can also get discounts on IntelliStation 185 and 285 workstations, which also run AIX and Linux. All current System i servers, which are also based on the Power5+ processors, are covered by the discount, too, from entry to enterprise-class boxes; these machines are predominantly i5/OS, but can also run AIX and Linux inside logical partitions. While the discount is available to big Power-based servers, IBM does not actually expect customers acquiring such big iron--which costs millions of dollars--to buy this gear online.

Ditto for the System z9 BC and EC servers that are covered under this deal, which range from a fraction of a single mainframe processor core all the way up to a 54-core behemoth. But, if you want to acquire a new System z9 mainframe online, you'll get 10 percent off. Mainframe customers can probably do better than this by negotiating with a reseller or with an IBM sales rep in their office.

The current line of System x servers and BladeCenter blade servers get the online sale discount, too, and this is where IBM will probably get the most traction. It is very hard to get more than 10 percent off on small volumes of any X64 server, whether the machine is in a tower, rack, or blade form factor. All the current System x servers can get the online discount, and the blades using Xeon and Opteron processors--that's the HS2X and LS2X models--also get the discount. But the JS20 and JS21 Power blades and the QS20 Cell blades do not have the discount.

IBM's tape drives, tape libraries, and entry and midrange disk arrays are also covered by this deal, as are a number of storage area networking switches.

Perhaps most significantly for bargain hunters, the warehouse of second-hand servers and storage products that IBM Global Financing peddles is also eligible for the discount.

Under a separate offering also announced this week, IBM is offering big discounts for System x server customers who buy 73 GB, 146 GB, and 300 GB disk drives online--in either 10K RPM or 15K RPM speeds--if they buy before June 29. The discounts range from 25 percent on 36 GB disks up to 40 percent on 300 GB units.

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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik,
Shannon O'Donnell, Timothy Prickett Morgan
Publisher and Advertising Director: Jenny Thomas
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