IBM’s Move On Up To Power7 Upgrade Math

January 16, 2012 Timothy Prickett Morgan

If you are using an old PowerPC, Power4, Power5, or Power5+ system, you have no doubt long since paid for the machine. And I would even go so far as to guess that you have created your own applications to run on OS/400 or i5/OS–and perhaps even IBM i–on these old machines, or maybe you have some third-party apps that do what you tell them to and, more importantly, don’t do things you don’t tell them to do, like crash all the time.

So with the economy not exactly exuding exuberance, rational or any other kind, you are probably feeling a bit smug right now. Your AS/400e or iSeries or System i machine does its job and doesn’t cost you much money. Until you do the math, that is, at least according to the way that IBM does it.

I was fishing around on the IBM Website and came across the Move Up To IBM Power Systems area that shows the monthly operational costs of keeping a vintage entry or midrange machine around and contrasts that with moving up to a new Power7-based entry Power 720 model. IBM’s analysis is a bit simplistic, of course, but it is an example of the kind of comparisons that you can gin up for yourself if you are not feeling so smug about the old iron and software you are using in your data center and want to get a new system.

IBM’s comparisons just stack up the cost of software maintenance, hardware maintenance, and power on a monthly basis for these old machines against software maintenance and a monthly lease for a new Power 720 Express. I presume the costs on the Power 720 are for a machine with one core activated running either IBM i 6.1 or IBM i 7.1, but Big Blue doesn’t say. (You can infer it from the 5,950 CPW performance rating in the comparison, since a four-core Power 720 is rated at 23,800 CPWs.)

Here’s a graphical representation of how one comparison, an old iSeries Model 820 versus a new Power 720 on lease, stacks up:

The comparison above assumes that you are paying monthly for Software Maintenance (SWMA) on your base system as well as for hardware maintenance on the system if that is priced separately. Hardware and software maintenance are all under SWMA these days, but they used to be separate items. In fact, way back in the dawn of time, you used to pay only for hardware maintenance and an OS/400 license and you were covered until there was a major upgrade of OS/400; then you paid a version upgrade charge. As hardware got cheaper and systems software became more of the stack, IBM needed a recurring revenue stream from OS/400, i5/OS, and IBM i, so the original annual Software Maintenance contract, billed monthly, was born. If you go as far as to lease a new system and bundle the maintenance into the lease on the hardware, then you are essentially converting the perpetual licensing of the old OS/400 software into the recurring monthly fees that IBM has always loved about mainframe systems software.

IBM loves the “annuity-like” nature of its sales, which represent somewhere around half of its quarterly revenues. So it is no surprise that IBM wants you to stop looking at the sticker on a new Power 720 and start thinking about how low the monthly lease costs will be on the system and how much you will save compared to paying life support on older gear. Here’s how all the machines that IBM put in its online presentation stack up to the Power 720:

		Monthly Costs
Old		Software	Hardware	Power		Total	Cost
System	CPWs	Maintenance	Maintenance	Consumption		Cost	Per CPW
9405-520	2,400	$321	$296	$42		$659	$0.27
9406-170	73	$1,061	$467	$25		$1,553	$21.27
9406-270	2,350	$1,061	$639	$30	You	$1,730	$0.74
9406-520	3,800	$421	$263	$55	Already	$739	$0.19
9406-600	73	$1,061	$300	$29	Own	$1,390	$19.04
9406-620	464	$3,933	$1,054	$105	It	$5,092	$10.97
9406-720	1,600	$1,061	$830	$106		$1,997	$1.25
9406-800	950	$401	$275	$30		$706	$0.74
9406-810	750	$401	$225	$30		$656	$0.87
9406-820	3,200	$2,395	$1,086	$57		$3,538	$1.11

		Monthly Costs
New		Software	Hardware	Power	Monthly	Total	Cost
System	CPWs	Maintenance	Maintenance	Consumption	Lease	Cost	Per CPW
Power 720	5,950	$102	$0	$26	$353	$481	$0.08

I’ve seen IBM making these kinds of comparisons since the Power5 generation, when interest rates started plummeting and it was cheaper to finance a new entry iSeries system than it was a Ford pickup truck. (No kidding.) And IBM makes a valid point, even if it does not take into account all of the factors that go into making the decision to boot out an old system and put in a new Power7 box. Like, for instance, these comparisons being moot if you bought a duplicate system on eBay for a couple hundred bucks and don’t pay for hardware maintenance and are using something older than i5/OS V5R4 that doesn’t even have software maintenance. Your software maintenance is three good tape backups, one of which you hope restores in the event you need it to.

Personally, I like the smell of new iron as much as the smell of a new car. And with all that extra capacity in just one processor, it would probably not be too difficult to argue that a new Power 720 machine could do more and different things, too. With IBM eager to sell Power Systems machines and to provide financing for them, maybe it can’t hurt to call your reseller and see what kind of deal you can get. Interest rates are not going to get much lower, after all.