IBM Charges 20 Percent Premium for Software Running on Power6 Cores

Published: July 12, 2007

by Timothy Prickett Morgan

Last July, in an effort to cope with the complexity of software pricing in a world increasingly dominated by multicore processors spanning a number of different architectures, IBM's Software Group created a performance-based pricing scheme for 350 different pieces of software. Now that the Power6 machines have been shipping for a month, Big Blue is setting so-called Processor Value Unit (PVU) pricing for boxes based on the Power6 chip. And the good news is, IBM is actually giving customers a pretty good deal--especially compared to the deal as X64 customers are getting.

To recap what processor value unit pricing is all about, in case you have forgotten. (First, let me clarify, IBM uses the term "processor" where most of us in the industry say "core," meaning one execution unit inside a processor.) Starting last November, IBM is withdrew its per-core licensing charges on some 350 products and 1,300 part numbers, including its DB2 databases, WebSphere middleware, Lotus groupware, Rational development tools, Tivoli systems management programs, and bunch of other things. The PVU pricing does not apply to bundled operating systems and other software (like DB2/400, which is included on the System i by default).

Instead of this per-core pricing, IBM moved to PVUs, which are not precise measurements of an individual processor's performance (like mainframe MIPS are), but rather a way of tiering software pricing based on architecture and what premium IBM thinks it can charge for a core across different architectures and performance levels. To its credit, IBM also created the PVU scheme to make it easier to price its software and did so in such a way that it is easier to explain to customers, salespeople, and partners than a 1,300-item price list. By moving to this approach, IBM can say that software costs X dollars per PVU and only have one price per product with varying PVU ratings for different systems.

Under the PVU scheme, each Power5 or Power5+, PA-RISC, Itanium, UltraSparc-IV processor (all of these are dual-core chips in their most recent incarnations) is given a PVU rating of 100, which works out to 50 PVUs per core. Opteron, Xeon, PowerPC processors, as well as quad-core Power5+ modules (which run at slower clock speeds than regular Power5 chips) are rated at 50 PVUs per core as well. The X64 and PowerPC chips are dual-core at this point, excepting Intel's "Clovertown" Xeon 5300s, which are quad-core modules like the Power5+ QCMs and Advanced Micro Devices' "Barcelona" quad-core Opteron chips, which are now expected to come to market in August. Sun Microsystems' Sparc T1 processors are rated at 30 PVUs per core, and that chip has up to eight cores. So software on that chip can be very pricey indeed, at 240 PVUs per socket for a fully activated Sparc T1.

IBM is rating dual-core X64 chips at 50 PVUs per core, and did not see fit to scale its premium for quad-core chips down to reflect the relatively modest performance gains that moving to quad-cores delivers because clock speeds are generally geared down when a chip maker crams more cores into a CPU socket. IBM is pricing its software at 50 PVUs per core in both dual-core and quad-core chips, which means customers have to pay a 100 percent premium on software to move to a processor complex that might provide about 40 percent to 50 percent more oomph than their dual-core predecessors. In plain English, if IBM wanted to rate PVUs fairly on X64 chips, each core in a quad-core chip would be worth 38 PVUs, not 50 PVUs.

This premium pricing approach for quad-core X64 chips is inconsistent with IBM's pricing on its own Power5 and Power5+ QCMs. (Yeah, I know--you are surprised.) These Power5+ QCMs provide about 50 percent more computing power at the socket level than a dual-core Power5+ chip, but IBM is charging 50 PVUs per core for the QCMs and 100 PVUs per core for the DCMs. What this means is that customers using the Power5+ QCMs pay the same for software as those using regular dual-core Power5+ chips--and more importantly, exactly what X64 customers pay, too. Software on the dual-core X64 chips is still, however, less expensive than on the dual-core Power5+ chips.

Which brings us to the real news. With the Power6-based servers--right now there is only one, but more will be coming this year and next--IBM is rating each core inside this new dual-core processor at 120 PVUs. (Last July, I guessed that IBM would rate Power6 at 150 PVUs per core, and IBM was even more aggressive than I expected.) Considering that the Power6 chips will run at 3.5 GHz, 4.2 GHz, and 4.7 GHz--more than twice the speed of the Power5+ chips, which run at 1.9 GHz and 2.2 GHz inside the same class of midrange boxes--and will deliver about twice the performance, charging only a 20 percent premium for software running on Power6 servers is a steal.

IBM is clearly trying bolster sales of its Power platform by offering lower software costs to customers than is available on other platforms, but doing so in such a way that it looks "fair." IBM did not, for instance, charge any premium at all for its software when moving from single-core to dual-core Itaniums; both cost 100 PVUs per core, and the Itanium 9000s do about twice the work of the single-core Itanium 2 chips. But a Power6 chip with two cores can do a lot more work than an Itanium 9000, and its 240 PVU rating is a lot lower than you would expect based on performance compared to the 200 PVUs for a dual-core Itanium 9000.

This kind of skewed pricing that smells like it is related to performance, but it really isn't.

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