Power Systems Cloud Builders Get Huge Discounts

December 3, 2012 Timothy Prickett Morgan

There is good news for Power Systems shops who are looking to move some of their IBM i and AIX applications out to the cloud or use cloudy capacity managed by a third party for disaster recovery. First, Big Blue is licensing both IBM i and AIX under special terms to managed service providers, or MSPs as they are called. And second, IBM has just launched a special utility pricing deal for MSPs that gives them deep discounts as they build out their initial Power-based clouds.

Both moves will go a long way toward lowering the initial capital expenditures that MSPs have to make to build Power Systems clouds.

While it is arguable that Power Systems machines offer better throughput, more scalability, and higher resiliency than X86-based machinery, no one can credibly argue that Power Systems hardware and software is not more expensive than X86 machinery running Linux and even Windows. The very fact that IBM announced lower-cost, Linux-only PowerLinux systems back in April proves that fact, since these machines were designed to compete head-to-head with x86 iron. As I said a month later, when I went over the PowerLinux pricing, IBM i and AIX shops buying plain vanilla machines paid a little more for processing capacity, paid two to three times for disk capacity, and around seven times as much for memory capacity. For the exact same features.

PowerLinux machines might have helped MSPs and other customers wanting to deploy Linux on Power, but there was no such deal to help MSPs wanting to start up IBM i or AIX machines for traditional hosting or for serving up logical partition slices in cloudy fashion. I have said it before and I will say it again: IBM should charge the same price for the operating system, database, and hardware for Power Systems machines–and package them in the same way–whether it is IBM i, AIX, or Linux. Any one OS gets a deal, they all get the deal. This is fair, and smart. Particularly if you want to keep that installed base of 150,000 IBM i customers, and even better still, grow it.

Buried in the October 3 Technology Refresh 5 update of IBM i, which was discussed in announcement letter 212-379, IBM offered special utility pricing on IBM i and AIX to MSPs building cloud/hosting environments based on Power iron. IBM announced a special PRPQ program that allows MSPs to order a certain number of operating system core licenses each quarter on Flex System compute nodes. Interestingly–and refreshingly–the price per core is the same whether it is AIX or IBM i: $500 per core per quarter, or $2,000 per year per quarter. This pricing is only available on IBM i 7.1 and AIX 7.1 Express, Standard, or Enterprise. Also interesting is the fact that IBM is charging the same price regardless of AIX edition.

Not every MSP wants PureFlex cloudy iron, apparently. And MSPs apparently want deeper discounts on both iron and software, too. Because in announcement letter 312-133 IBM is offering steep discounts–so steep I had to look twice to see if my tired eyes were lying–for companies building their first Power Systems clouds. You have to blow a certain amount of cash in the deal to get the discounts, which vary by machine type.

PS703 blade server (7891-73X) with minimum single unit purchase price of $30,000–55 percent discount
Power 720 rack/tower server (8202-E4C) with minimum single unit purchase price of $40,000–55 percent discount
Power 740 rack/tower server (8205-E6C) with minimum single unit purchase price of $55,000–55 percent discount
Power 770 rack server (9117-MMC) with minimum single unit purchase price of $210,000–65 percent discount
Power 770+ rack server (9117-MMD) with minimum single unit purchase price of $210,000–65 percent discount

The later machine, of course, is based on the new Power7+ processor, which will be spread across the Power Systems line in 2013.

The MSP Utility Pricing Offering for Power Systems deal also includes steep discounts on the IBM i and AIX operating systems and the PowerVM hypervisor. Try 60 percent off. That covers IBM i core licenses (the release level was not specified, so it might be 6.1 as well as 7.1, but it is silly to install 6.1 at this point unless your app has not been certified) and the three different editions of AIX (at the 7.1 level). IBM per-user fees on the Power 720 and PS703 blades are also available for the discount, and so is PowerVM Enterprise Edition and three-year Software Maintenance (SWMA) contracts for IBM i, AIX, and PowerVM.

This MSP discount deal applies to new iron as well as to upgrades to new iron from existing systems. You can obviously buy more than one machine, and in fact IBM is hoping MSPs will buy dozens or hundreds.

This is one of the most generous deals I have seen coming out of IBM in a long, long time. I have a feeling that IBM might be worried that no one is building Power-based clouds and in an IT world that is increasingly thinking about hybrid processing–some inside the firewall, some outside in the cloud–Big Blue has figured out that you can’t preserve your footprint in the data center without making sure there is affordable cloudy capacity out there among the MSPs.

And before any of you MSPs try to get clever and resell these Power Systems boxes and licenses out the back door, it is hard to believe that the MSP Hosting Infrastructure with Utility Pricing contract from IBM does not include provisions restricting you from reselling to each other, to dealers, or to end users.

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