IBM Wheels And Deals To Get IBM i Shops Current

May 23, 2016 Timothy Prickett Morgan

We have been complaining a bit that IBM did not deliver new Power8+ processors and an expected bump in price/performance and lower prices as well to help stimulate the IBM i segment of the Power Systems business. But lo and behold, IBM is finally coming around to the idea that it has to actually do something to entice customers on old releases to move to the latest Power8 iron and to get their licensed program products and operating system on Software Maintenance.

The latest deal, called the IBM i License Transfer Promo, was unveiled at the COMMON conference last week by Bo Gebbie, director of sales and product management for North America Power Systems and server Linux solutions. (That is one heck of a title.) It was also unveiled to business partners on May 16 in announcement letter ZWAM6235A, which as an outsider to PartnerWorld, we do not have access to. But we know people who do, of course. So we can tell you what we know.

The slide that Gebbie showed is a pretty good summary of the deal, which has two components:

Let’s take these items one at a time. As you know, IBM charges a $5,000 per core fee to move an IBM i license from an old machine to a new one. We were never sure why the fee was so high, but there you have it and frankly, something more akin to $500 per core seems reasonable considering the fact that IBM doesn’t really need to do any work to get the money and customers have already paid for the software license. If you have a Windows Server or Linux license, it is not tied to a specific machine. You can turn off one machine and turn on another one and load it up.

Even if IBM wanted to be picky and say you needed to have a concurrent license for two machines for the week you were doing the upgrade, it should never be more than a fraction of the cost of the actual license. If a license is amortized over three years, and you take a week to do an upgrade, then maybe a transfer fee should be worth one out of 156 weeks of the license, or about six-tenths of a percent. A P05 license costs $2,995 per core and a P10 license is $11,995 per core (or at least it used the last time I saw list prices for IBM i), so you are talking about $18 or $72 per core. That is a hell of a long way from $5,000. But I digress. By the way, from IBM’s software transfer guide, you can use a license concurrently on two machines for up to 15 days. So I am a bit mystified as to what this fee is anyway.

The point is, IBM is waiving these license transfer fees from customers moving from older machines to new Power8 iron, specifically to customers who buy new “scale-out” Power Systems machines, including the single-socket Power S812 and the two-socket Power S822 and Power S824. This is going to be a savings of between $5,000 and $20,000 for the typical IBM i shop, which has from one to four cores activated, and a lot more for those with larger systems.

IBM offered similar i5/OS and IBM i license transfer fee deals back in 2010 and 2011, but the terms were a little different and as you can see if you read the stories from back then, IBM did not provide a lot of clarity about how the deal works. I have seen the partner announcement, and it applies machines in the P05, P10, and P20 software tiers that encompass the Power8 scale-out systems mentioned above. The machine that is being upgraded to the Power8 iron has to have been installed for a year as of May 16, and the free IBM i license transfer will be available until September 30 inclusive. IBM says that you cannot combine this deal with any other deal, but as usual, I think this is hogwash and people combine deals all the time.

The second part of this deal involves After License charges for Software Maintenance. With these After License charges, customers who have lapsed in their maintenance fees are charged a pretty hefty fee to get IBM i and a bunch of licensed programs that run on the system back up to current maintenance levels. The concept behind After Maintenance fees is that if you go off maintenance for a year or two or three, when you get current again you are benefitting from all of the work that IBM has done to patch and update the software and therefore, like other customers who were on maintenance, you should have to pay for the cumulative Software Maintenance of the lapsed time. As we pointed out in an After License fee amnesty program that IBM announced with business partners in February 2015, we have heard that IBM tries to charge as much as two years of maintenance with this After License fee, but the partners we talked to who sell mostly P05 and P10 systems say that IBM rarely tries to charge more than a year of SWMA for this fee to get current. With only about 30,000 of the 120,000 IBM i and i5/OS customer sites on maintenance, you think IBM might get the idea that its maintenance fees are too high or perhaps the After License fee is. But what do we know?

In any event, under this IBM i license transfer promotion, if the system that is being tossed out has lapsed Software Maintenance, IBM is willing to look the other way and let the customers fire up tech support on a licensed transferred to a new Power8 machine if customers get it done before September 30. This could be a substantial amount of savings considering that Software Maintenance runs about 25 percent of the licensing fee per year.

According to the announcement letter to business partners, this IBM i License Transfer Promo is available in the United States and Canada, but as I have said before, any deal that is available in North America should be available in all parts of the globe. This is International Business Machines, after all.

“Hopefully this helps you, and it helps you make a justification if you have not moved to Power8,” Gebbie said at the COMMON keynote last week referring to this deal.

We think this will help. So will some wheeling and dealing on hardware, which has gotten less expensive in the past 18 months as Intel has introduced new Xeon processors and the cost of memory and flash and disks have all come down. It will take more than just some forgiveness on Software Maintenance and license transfer fees to get people to jump.

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