IBM Slashes On-Demand CPU And Memory Prices

February 24, 2014 Timothy Prickett Morgan

As I said at the beginning of the year, I expect that IBM will start wheeling and dealing to boost sales of its Power Systems machines ahead of the delivery of shiny new Power8 systems sometime around the middle of the year or so. If you have one of the midrange or high-end Power Systems machines that have latent processor cores or main memory in the box that has not yet been activated, then Big Blue has a deal for you.

With the Power Systems CUoD discount promotion, which you can see in announcement letter 314-021, IBM is slashing prices on latent cores and associated main memory on several generations of machines. The deal runs from February 13 to March 26, so you have to act fast, and my apologies for not letting you know sooner, but this deal is one of those stealthy ones that pops up in the IBM customer letter system out of the normal cycle and is not part of the abstracts–or at least it wasn’t when I looked two weeks ago and then a week after that. You have to activate the cores and memory before March 28, too, which means IBM can book the revenue for the sale in the first quarter.

As far as I can see, the deal is only available in the United States and Canada, but if you are a customer in Europe, Asia, or in Australia and New Zealand (hello, those of you who are having your late summer Dowhn Undah, I have some snow with your name on it), then I would kick up a fuss and demand the same deal. IBM can offer capacity on demand, and you can demand capacity on demand capacity at a demanded price. If you see what I mean. IBM is slashing the prices on CPU activations and memory activations by 58 percent, so it is worth arguing for.

This pricing might be a kind of indicator of what IBM expects to charge for Power8 capacity, and then again it may not. The Power8 core will be about 1.6 times as powerful as a Power7 core, based on early performance tests and based on a 4 GHz frequency for both chips. (The Power8 in the labs has been tested running at between 2.5 GHz and 5.5 GHz, as I reported in last week’s issue of The Four Hundred.)

The discount deal is available on the Power 570 server equipped with Power6 processors running at 3.5 GHz, 4.2 GHz, 4.4 GHz, 4.7 GHz, and 5 GHz and the DDR2 memory not activated in your system. (Remember when the clock speeds went that high?). You can get the special CUoD discount on the Power 770 server with the 3.1 GHz, 3.3 GHz, 3.5 GHz, and 3.72 GHz Power7 chips as well as for the DDR3 memory in the box. For the Power 770+ kicker, the deal applies to latent Power7+ cores running at 3.8 GHz and 4.2 GHz and the DDR3 memory sticks on the processor card. The Power 780 with the 3.86 GHz or 3.92 GHz Power7 (which have a 4.14 GHz TurboCore mode when four of the eight cores are turned off) can get the discount, too, as can the Power 780+, which has Power7+ chips running at 3.72 GHz or 4.42 GHz. The Power 760+ announced last year also has CUoD features, and in this case the 3.1 GHz and 3.4 GHz dual-chip modules are eligible for the deal. The 4.2 GHz and 5 GHz Power6 chips used in the Power 595 system from way back can also be activated with the 58 percent shaved off the price, and ditto for the 3.7 GHz and 4 GHz Power7 chips used in the Power 795.

While 58 percent is a pretty big discount by IBM’s standard, given the price of some of the older processors, it is probably wise to make sure activating those old cards makes sense relative to the cost of buying a whole new Power8 machine. A newer processor has more features, memory addressability, and so on and will support newer operating system releases for a longer period of time. If history is any guide, IBM will keep Power Systems prices more or less the same and double up the performance. That means a core will cost roughly the same and, presumably, the software stack will cost the same on a per-core basis.

I hope history is not a guide here, because Intel and its server partners (including IBM and soon Lenovo) are offering Xeon E7 systems–as I explain elsewhere in this issue–at prices that make midrange and high-end Power Systems look pricey indeed. If all IBM wants to do is milk the current AIX and IBM i base and gradually bleed down that base and let X86 rivals pick off customers one by one, then it will keep the same strategy as it has had for many generations. If it is serious about stabilizing and growing the Power Systems business, it is going to have to make it up in volume. Knowing IBM for two and a half decades now, I can say that I doubt IBM will change its pattern, but I will be damned sure happy to be surprised–and wrong. So, go ahead, IBM. Make me wrong. Get serious about just pricing Power Systems aggressively and competing against X86, whether or not they are running Linux.