Simplified IBM i Stack Bundling Ahead Of Subscription Pricing

May 16, 2022 Timothy Prickett Morgan

There are a bunch of things that were announced on May 3 by IBM ahead of the POWERUp 2022 conference coming later this month and well ahead of the launch of entry and midrange Power10 machines in July. One of them was IBM i 7.5, and the other was the Modernization Engine for Lifecycle Integration, otherwise known as Merlin, for transforming old RPG code into free format RPG code.

The third thing, which IBM has been talking around for a while and is getting more serious about is offering IBM i hardware and software on a subscription basis rather than having customers buy iron and buy perpetual licenses on software and paying maintenance on both.

We did a shorty on this based on information we got ahead of the May 3 announcements from a prebriefing with Alison Butterill, IBM i program offering manager, in anticipation of more details being made available.

Thus far, this hasn’t happened – we really want to know precisely what the pricing is on the subscription-based Power S914 and how it compares to buying a Power S914 and its software and paying support for both. But announcement letter 222-207 from May 3 lays out the situation now, saying that starting on June 28, the four-core Power S914 machine will be able to have an IBM i operating system license sold as a subscription on that machine, combining licensing and maintenance with subscription terns running annually for between one and five years with monthly subscription pricing. This will only be available at first for customers buying a new Power S914, which is odd considering the Power10 machines are right around the corner, but we strongly suspect IBM will offering similar IBM i pricing on Power S1014, Power S1022, Power S1024 entry machines and even the Power E1050 midrange machine. This announcement might be an indication that IBM may not create a single-core or four-core Power10 machine with an entry IBM i price point, but I wouldn’t read too much into it yet. We shall see.

IBM warns in this announcement that the Licensed Program Products – those dozens of add-on tools, many of which are free, that turn IBM i into a platform – are not yet given subscription pricing, but that this is coming. So is having subscription pricing for selected hardware so you can have cloud-like pricing in your on premises datacenter just like you could do with reserved instances on a cloud.

Here is the promise, and the general roadmap for this:

As you can see on the right hand side of this IBM i subscription roadmap, the plan is to eventually offer subscription pricing on the LPPs. But, says Butterill, IBM thought it would be best to consolidate down that LPP stack and bundle even more of them together so the pricing doesn’t get too hairy for people to deal with.

And so, IBM is doing just that:

The columns on the left of this chart are those that are separately priced these days, and significantly, font, application and database threading (SMP), high speed printing and fonts, HA subsystems, performance tools, and job scheduling are currently licensed separately and charged for separately. But in the future, after a pricing action that is expected later in May, the column on the right is all of the LPPs that will have a separate price tag above and beyond the IBM i license. Customers or their business partners will have to ask for the now-free software to be added to their machines – they are still separately orderable, not automagically installed

We have no idea what the base IBM i subscription will cost – we expect deeper price cuts the longer the term of the subscription, and all that IBM is saying now is that subscription term licensing, as this is being called, will have a “lower entry price than perpetual.”

What we wanted to know was the value of all of the LPPs that just had their price tags erased as part of the licensing simplification ahead of providing a subscription price alternative. (That is an important point, that IBM is not forcing customers to move away from buying hardware and software and then paying support. Big Blue is happy to do it old school as long as software is being supported, but it is adding subscriptions, too.)

“On the low end machines, the list prices of the LPPs that we are entitling with IBM i is about $50,000,” Butterill tells The Four Hundred. “On the high end machines, the list price of the products ranges is about $200,000. There are things that vary, like users, and so forth, but this is what I calculated.”

The effective discount of the LPP bundling will depend on what customers would have bought if it were not free, but it is probably a pretty decent pile of dough that customers will be saving. Which means it can be applied to a Power10 upgrade and maybe the use of the Merlin application modernization tool, too – and eventually, have all of the cost spread out over time instead of all coming home at the front end.

We have been asking for this for a long, long time. And we look forward, again, to see more details about how this will be done.

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