More On That Power8 Core Activation Deal

November 13, 2017 Timothy Prickett Morgan

In days gone by, which unfortunately I remember very well, it was not that difficult for any of us to find out what the pricing on every single piece of hardware and software was that comprised an IBM system. The difficulty with IBM’s very sophisticated pricing databases was reckoning how the many pieces fit together to build a system.

Pricing information for Power Systems iron is a bit harder to come by these days, and as far as I know the pricing databases that I had access to for more than two decades were re-routed to configurators that could only be used by official business partners doing deals. This eConfig wall has the effect of crimping analysis of the price/performance of systems for the sake of comparing when shopping around, and that is precisely the intended effect. (This should be against the law, and technically it was when the 1956 Consent Decree against Big Blue was still in effect.)

But, we are an IBM i community and we have always depended on the kindness of each other for the greater good of the whole. When IBM announced its special Request for Price Quote, or RPQ, series of deals on a few of the so-called scale-out variants of its Power8-based Power Systems line two weeks ago, which we reported on here, we said that we would drilling into the pricing and see if it was a good deal or not. We had a bit of trouble finding pricing on the 12 different configurations affected by the deal.

Under that deal, to recap, IBM is giving customers who buy selected Power S812, Power S814, Power S822, and Power S824 systems free activations on all of the cores in the box if buy before the end of the year. With these machines, you buy a processor card with one or two processors and a certain number of memory slots, and then IBM charges an incremental fee to turn on the cores. (Unlike enterprise class Power Systems machines, the memory on these scale out machines does not come pre-installed with per-gigabyte activation fees on top of the cost of buying the card with the processor and memory.) For memory you just buy it and it is active.

Here is a nice summary table for the deal, which I did not have last week, which shows the RPQ numbers and activation codes and processor feature codes for the four different machines listed:

This should help you figure out how to reckon what is being discounted better than the information I had last week.

I did have some priced configuration information from the comparisons I did with the Power S812 Mini, the single-core IBM i box that IBM announced back on Valentine’s Day, plus the sample configuration that business partners were passing around for a Power S822. With these three configurations, we have a better sense of what the real discount on the systems might be.

If you want to be generous and just look at the cost of compute on these three machines – meaning the cost of the processor cards and the core activations – then the discount looks pretty sweet. Something like this:

Somewhere north of two-thirds off list price for the compute is pretty good, right. Well, it is until you actually configure a system. If you add in the enclosure, the memory, disks, and other peripherals to make a system, it is something more like this:

In the case above, the machines are all configured with the processors shown plus 256 GB of memory and two 300 GB 15K RPM disk drives and basic peripherals and cables. Nothing fancy. And the discounts are not quite so steep then.

If you wanted to add in the cost of license IBM i on the machines, which costs $14,995 per core including one year of Software Maintenance on the Power S822s and $44,000 per core on the Power S824, then it is immediately obvious that this very generous discount is utterly swamped by the cost of the operating system and its integrated database. This, to me, is a bit disheartening. Generally speaking, the software stack is about half to two-thirds of the cost of a system, and the hardware is not all that much these days. So discounting the hardware helps. But even giving it away for free doesn’t lower the overall system price by that much.

What this means, of course, is that IBM i customers who are willing to buy a Power8 system now rather than wait for a Power9 box early next year have to argue for deep discounts on the IBM i stack. This is where the real cost is, and while I always like to see customers get a deal, free core activations on machines that are just going to sit in the barn anyway and rust and have to be written off is only a step in the right direction to stimulate demand.

The real problem is that IBM doesn’t want to stimulate IBM i and AIX demand so much as compete with X86 with Linux and take what it can get on the IBM i and AIX side.

Any thoughts or information you might want to share are appreciated.

2 thoughts on “More On That Power8 Core Activation Deal”

Paul H. Harkins says:

November 13, 2017 at 12:50 pm

AMEN.

IBM is following closely behind GE in ignoring obvious and immediate salvation.

Paul H. Harkins

King Harrison (@kingharrison) says:

November 14, 2017 at 6:47 pm

Does this apply to owners of Power8 who want to unlock more?

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