IBM Tweaks Power Systems Rebate Deals Once Again

February 13, 2012 Timothy Prickett Morgan

Those marketeers at IBM are at it again, jiggering and rejiggering their Power Systems deals.

Two on-again, off-again deals that Big Blue has been running for years were modified last week. The Power Systems First In Location rebate deal was modified in announcement letter 312-018. This deal was last tweaked in June last year, when IBM added and subtracted the machines that could be acquired as well as the ISV applications that could be acquired to be eligible for the deal. This time around, the Power7 Gen2 machines that have PCI-Express 2.0 peripheral slots–the entry and high-end machines that were announced last October–are now part of the rebate deal. The rebates range from a low of $500 on a PS700 blade server with four 3 GHz Power7 cores to a high of $140,000 on a Power 795 behemoth 256 cores spinning at 4 GHz.

In announcement letter 312-109, the Software Solutions for Power Systems Competitive Migration rebate deal was also updated. This deal gives rebates to customers who are getting rid of non-Power machines to run a selected list of applications; it was also previously updated last June and is adding the Power7 Gen2 machines from last October to its list of eligible machines. Under this deal, you can have other Power-based machines on site, just so long as you are unplugging a non-IBM box. The rebates run from $500 to $140,000 on the same Power7 systems acquired.

Considering the cost of the complete hardware and software solution that IBM is peddling, those rebates are not particularly large. I have no idea how representative they are to the types of discounts IBM offers to customers. But what I do know is that IBM loves rebates because they allow it to book revenues at list price and then take the rebate out as a cost of a sale. That keeps the Power Systems revenue line up even if it does impact the pre-tax operating margins for the line. I have a feeling the rebates get a lot bigger in contested accounts, or those companies that are buying lots of iron.