IBM Allows i and 5250 Licenses to Jump Hardware
August 9, 2010 Timothy Prickett Morgan
I think IBM might be coming around to the idea, however belatedly, that its pricing on the i 6.1 and i 7.1 software stacks is a bit too pricey for midrange and enterprise shops to handle. It has taken some time and IBM is not admitting this by coming right out and cutting its prices. But the company has been chipping away at systems software prices here and there and is now allowing customers to transfer operating system licenses if they move up to Power7 iron, and in some cases, if they move to Power6 or Power6+ iron, too.
The funny bit–by which I mean funny peculiar not funny ha, ha–is that Big Blue has not put out an announcement letter explaining to customers that this i license transfer deal even exists.
A bit of background is in order. Back in April, just before i 7.1 came out and just after midrange Power7 iron came out, IBM held prices steady for its i 6.1. and i 6.1.1 operating systems, but then slashed the price of the Application Server edition of the i platform (the one without the DB2 for i database) from between $14,000 to $19,000 per core (depending on the size of the machine) to a flat $9,000 per core. The Application Server edition of i 6.1, i 6.1.1, and i 7.1 has everything turned on to allow the software to operate as an RPG, COBOL, Java, or PHP application server, but assumes customers will be using the DB2 for i database in a separate partition. It has always been ridiculous to charge for a database when OS/400 or i was being used solely as an application server, so IBM changed this a number of years ago. (To its credit.)
In May of this year, after what must have been a lot of complaining on the part of customers, IBM slashed the cost of its 5250 Enablement software considerably (which allows the AS/400’s green-screen protocol to run). IBM cut the price of the per-core 5250 Enablement (feature 4988) on Power 550 servers from $50,000 down to $15,000 (a 70 percent price cut), and slashed the cost of turning green-screen capacity on for all four cores in the box (feature 4999) from $150,000 to $60,000 (a 60 percent price cut). At that point, customers buying Power 750s sporting those new Power7 processors should argue for the same 5250 Enablement pricing.
While these changes cut the software bill for customers buying specific software on specific machines, it does nothing for customers who are upgrading. The reason why, as I explained several years ago, is because beginning with OS/400 V5R3 back in 2005, IBM tied a software license to OS/400 to a serial numbered machine; it was not transferable to a different piece of iron. This had the effect of killing off the market in used Power5 and Power5+ servers, as you might expect, because even when iron was competitive, software costs per core would be the same for any given OS/400 or i release, so customers would always be compelled to get the fastest cores they could and therefore have the fewest number of software licenses to support a given workload.
Apparently this strategy of tying an OS to a particular server has not made upgrades to Power7 iron affordable, and in this economy, IBM has to do something. So under the IBM i license transfer offer, which you can read about here, IBM is allowing some of the i operating system licenses to move from the old to the new box.
In the IBM documents I have seen covering the deal, which have details not shown on that Web page above, both the source and target machines have to be on Software Maintenance (SWMA). The source machine has to have been installed for at least one year, and despite what the IBM site says, is applicable to any Power 550 or larger system, not just Power 550 to Power 750 upgrades. All of the licenses are not transferable from the old to the new box, of course–IBM has to make some money in the deal. So customers participating in the transfer program have to buy the initial i 6.1.1 or i 7.1 license on the first core in the Power7-based machine. After that, any additional i licenses you had on the box can be transferred over at a cost of $5,000 a pop.
Just to review and consolidate i 6.1.1 and i 7.1 pricing:
The interesting thing about this i license transfer deal is that it is not restricted to customers moving up to Power7-based machines. It is available to anyone moving from a Power5, Power5+, Power6, Power6+, or Power7 machine that wants to move up to another Power6, Power6+, or Power7 machine, as you can see here:
IBM says that the operating system license transfer is intended to help customers who are buying replacement systems, doing server consolidations, moving workloads between machines, or taking machines off lease that they had bought software licenses for. This just about covers any situation I can think of except selling a machine on the used equipment market, where the OS license is still tied to the machine. But not if customers untie it and move it to another box.
Here’s IBM’s math on how much money this i transfer deal can save customers:
I have stared at these numbers for a while, and I think they were made by someone who didn’t understand IBM’s own rules. In the Power6-based Power 550 to Power 750 example, there are three i operating system licenses and one core of 5250 enablement. The price of a brand new 750 plus three i operating system licenses (for three cores) plus 5250 enablement for one of the cores is then shown. Then the license transfers at $5,000 a pop are shown, dropping the price of the Power 750 machine from $289,000 to $172,000, and then the 5250 RPG is added on, cutting the price by another $45,000 to $127,000. But no base i 6.1.1 or i 7.1 operating system is shown. You’d have to shell out another $40,000 plus $4,000 for SWMA on one of those cores, which means it is $167,000 if the SWMA for the old Power 550 transfers.
The second example works like I would expect it to, with a jump from Power5-based Power 550 machines to the newer Power 750 box. You start out with three cores with an OS/400 or i operating system on them, and you buy one whole license plus SWMA for $44,000 plus shell out $10,000 to move over two of the three OS/400 or i licenses that were on the box. With the $5,000 for one core of 5250 enablement, the price for the resulting Power 750 system is $166,000, with only $59,000 of that being for software. IBM’s Web page says $156,000, but the company did its own math incorrectly. And where it says $221,000 for the Power 750 taking into account just the OS/400 and i license transfers, it says $221,000 but the math is really $211,000. (This may be fixed shortly after this story runs.)
The text on the IBM Web page explaining the deal also says that the RPQ for feature 4988 is a free processor that activates one core’s worth of 5250 capacity, but IBM is charging $5,000 for that 5250 capacity in its tables. I think the $5,000 figure is real. I don’t think IBM meant to say free in the text describing it. Finally, IBM’s table has periods where there should be commas. This is not France, and you cannot get a whole new Power 750 with three cores activated with i for $166. But that would be kinda neat, now wouldn’t it?
For stories related to OS/400 and i operating system licensing:
For stories related to the Power7 rollout: