IBM Wheels And Deals On Big Iron Compute And Memory
February 15, 2016 Timothy Prickett Morgan
With the Power8 processors having been on the market in IBM‘s Power Systems machines for nearly two years now, and Intel widely expected to launch its “Broadwell” Xeon server processors within the next few months, you might think that Big Blue would be out there wheeling and dealing, offering all kinds of clever deals to try to keep machines moving.
Maybe IBM’s sales force is doing this, and maybe its resellers are doing this, but the past two years during the Power8 generation have been the most quiet ones I can remember when it comes to a lack of formal deals coming down from on high to help the company and its partners push more products. You would think with only something on the order of 34,000 Power Systems servers sold last year–that is a number that comes from the box counters at IDC–the company would be motivated to get a bigger share of the 9.67 million server units that the world consumes. I realize that this is precisely the goal of the OpenPower Foundation, but IBM can’t wait for others to ramp and sell. IBM has to wheel and deal to get its base modernized.
I have a long memory, and that means I can recall when IBM sold 80,000 or more AS/400s alone per year and drove close to $5 billion in sales alone. With somewhere around 125,000 customers worldwide in the IBM i base and maybe half as many running AIX or Linux–call it an even 200,000 customers just for the sake of argument. So maybe selling 34,000 machines in such a base is not so bad. You decide. What I know is that the older Power iron in the base runs well and last long, and that, more than anything else, is a problem for IBM as well as a feature that customers depend upon.
At any rate, I am pleased to see that IBM is offering customers some sort of deal in the first and second quarters to try to boost sales, and it is taking a page out of its 2015 playbook and hitting reboot on a promotion that presumably worked.
In announcement letter ZAAM6155A, the Power Systems Capacity Upgrade On Demand Promotion is giving customers with installed Power 795 machines using Power7 chips, Power 770+ and Power 780+ machines based on Power7+ chips, and Power E870 and Power 880 machines based on Power8 chips discounts on processor core and memory capacity activations on latency capacity in the boxes. As you know, when IBM ships these machines, the processor cards in each model come with their processor sockets and memory slots fully populated. Customers pay for these base electronics, and then pay an additional fee to activate cores and gigabytes of memory.
As we previously reported, IBM offered a similar deal back in March 2015 for customers in the United States and Canada, on the same machines. In that case, the Power E870 and Power E880 lines were not fully fleshed out, and the discounts varied based on the processor or memory activation. Some features in the deal from a year ago had a 52 percent discount, while most of them had a 40 percent discount.
In the current deal, IBM is holding the discounts steady across Power7 and Power7+ machines, whether they are for core or memory activations, and keeping them consistent (and lower) on the Power8 machines. IBM is also spreading the deal over two quarters, offering deeper discounts for the first quarter of the year and slightly less generous ones before it runs out in the second quarter. The idea is to encourage customers to activate cores well ahead of the Power8+ launch expected later this year, and to get customers to do the activations sooner rather than later.
To be specific, memory and processor core activations have a 51 percent discount on the Power 795, Power 770+, and Power 780+ machines in the first quarter, and this drops to 48 percent in the second quarter on these machines. IBM is not, we will point out, offering discounts on new processor cards sold in new machines or added to existing ones, and this is a big portion of the cost (although those core activations add up, too). On the Power E870 and Power E880 servers, the discount on core and memory activations is 46 percent in the first quarter and 40 percent in the second quarter. Customers have to buy at least four processor core activations and at least 64 GB of memory activations to take part in this promotion, which kicked in on February 9. Machines have to have been installed as of January 1 of this year to be eligible for the deal, and customers have until March 25 to place their orders and until March 31 to activate the cores or memory for the first quarter discount, and have until June 24 to place their orders for the second quarter and until June 30 to activate the capacity. (IBM can only book the sale once the capacity is activated.)
Once again, IBM is restricting this deal to the United States and Canada, and once again, we would point out that there is no reason why customers in Asia, Latin America, or Europe should not be given the same deal.
As far as I know, there is no deal on the books for entry and midrange systems that can run the IBM i operating system like this one. Part of the reason, of course, is that the smaller Power7, Power7+, and Power8 machines do not have Capacity Upgrade On Demand features precisely like the bigger boxes do. But, IBM can give deals on memory and CPU cores just the same, or even more importantly, could offer discounts on the IBM i operating system for customers who are on older releases and off Software Maintenance. There are things that can be done to get the Power Systems base running OS/400 and i5/OS releases to move on up to IBM i. There are around 95,000 of such customers, and they need a reason to move ahead as well as a deal to make it easier for them to get there.