IBM Messes With System p 595 Prices, Tweaks Deals

Published: August 30, 2007

by Timothy Prickett Morgan

Sometimes, server makers do things that seem to make sense, and then they do things that are a bit odd. This week, odd is following sense when it comes to IBM's high-end System p 5 595 servers. A week ago, IBM shaved the prices on converting from a single-chassis p5 590 machine to a two-chassis p5 595 machine. This made sense. But raising the price on the base chassis in new p5 595 machines, as Big Blue did this week, doesn't make a lot of sense.

The cut in price on the chassis conversion from the p5 590 to the p5 595 was from $104,000 to $34,000, a 67 percent decline. But against a system that can cost millions of dollars, this is a pretty small absolute amount of dollars. (The p5 590 supports up to 32 Power5 or Power5+ cores in a single frame, while the 595 puts up to 64 cores in a two frames. When you think about it that way, even $34,000 is a lot to pay for a bunch of bent metal with some power supplies.) In any event, with no high-end Power6 system in sight, IBM clearly wants to sell customers upgrades on Power5 and Power5+ boxes now rather than have them wait until a revamped Power6 line is fully fleshed out. So this price cut on the conversion made sense.

On Tuesday of this week, IBM raised the price of a new base p5 595 chassis from $5,490 to $93,372. The company gave no explanation for the price increase, as it never does that sort of thing. But this is a massive increase, obviously.

Also this week, IBM went through its third quarter System p sales playbook and made a number of tweaks to current deals it has on the books to try to push its AIX iron. First, a deal that gives rebates to customers who buy a new System p 560 or 570 server if they replace older IBM AIX servers or Unix boxes from Sun Microsystems, Hewlett-Packard, or Fujitsu-Siemens has been modified again, this time to give customers rebates on the new Power6-based System p 570 server (technically known in the IBM databases as 9117-MMA). IBM is offering a $10,000 rebate for every four cores activated in a base system, which scales up to 16 of the Power6 cores in a single system image. No other changes were made in the deal. The rebates on the replaced machines do not include recent-vintage Unix gear from competitors, just stuff that is one or two generations back, and not every machine in their product lines is being given a rebate. This rebate deal was originally announced in November 2005 as a System p 650 to System p 570 upgrade offer, and was expanded to include rebates on non-IBM Unix gear and tweaked several times in the past two years.

The Power6-based System p server was also this week added to existing rebate programs for customers buying IBM Unix boxes to support ERP applications from Oracle and SAP. Those rebates range from $1,000 to $300,000, with the size of the rebate scaling along with the performance and cost of the System p box acquired to run these applications. A similar and broader rebate offering on the same iron for a larger set of applications and other software on AIX also now has the Power6 box in the list of iron customers can get a rebate on. Those rebates range from $1,000 to $225,000.

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