More Reader Feedback on User-Based System i Pricing

May 14, 2007 Timothy Prickett Morgan

The i5/OS and OS/400 community is still digesting the user-based pricing that IBM announced with the new i5 515 and 525 servers a month ago. I have received some interesting feedback in the wake of the announcement, which we published a few weeks ago, and it is still coming in. If you have any thoughts you want to share, hit the Contact button on the top of this page and speak your mind.

Here is another interesting comment from a reader:

On April 16, you opined, “Cheap lease rates cannot make up for the fact that a configured machine at $12,000 cannot be acquired by small i5 shops for a single user. Many i5/OS and OS/400 shops grouse about paying that much for a server that is shared by tens of users.”

That’s an unrealistic attitude. While System i prices are not cheap, spending $15,000 for a system that lasts three years for five developers is $1,000 per developer per year, and that is not an unreasonable price to pay for a piece of productive equipment. A decent single-user Wintel workstation is $3,000; it’s likely to be replaced every other year and then you end up with a cost of $1,500/developer/year. Any business developing Java and PHP applications will likely have a long get-to-market path, and the salaries of those developers dwarf the cost of a 515. And don’t forget to factor in per-seat costs of Visual Studio, Visual Source Safe, InstallShield, and other required application development software.

Focusing on System i versus Wintel boxes cost comparisons is pointless because the environments are completely different. Most of us are not developing Windows applications and that’s what most of the SMB market wants. Most general business users today are far more comfortable in a Windows-type environment than in the 5250 world, and green-screen applications, regardless of their capabilities, are perceived as “old” and “hard to use.”

Yes, i5/OS is first-rate and the hardware reliability is spectacular. But I’ll paraphrase Willy Sutton and suggest we have to go to where the customers are. IBM’s midrange killed off its competitors, and we have to worry if Darwin’s principle of natural selection is at work today in the SMB space.

When I’m in competition with two Windows applications, I have to sell the green-screen concept AND the higher price of the System i before I get onto the playing field, and then I still have to sell the application benefits.

While i5 515 and 525 pricing is a useful addition that may win some new accounts, it won’t win the midrange market back from Wintel. WHDT won’t do it either, so IBM has three choices: Hang on to 5250, embrace ASP.NET, or gamble that the volume of application development based on WebSphere/Java/Linux/PHP technologies will derail ASP.NET within a reasonable timeframe.

I wish I could set the clock back several years or forward several years. The present is not pleasant.

–Reeve

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