Low-End IBM i P05 And P10 Tiers Go Subscription-Only Pricing First
September 11, 2023 Timothy Prickett Morgan
We were away for our annual summer hiatus relating to the Labor Day holiday in America when Big Blue decided, as we anticipated in mid-August, that it would begin the shift to all-subscription pricing for the IBM i operating system, the integrated Db2 for i relational database, and the related IBM i Licensed Program Products (LPPs) that have been commonly used by Power Systems customers all through the OS/400, i5/OS, and IBM i generations.
Back in February, subscription pricing for the IBM i operating system and its integrated Db2 for i relational database was made available under subscription pricing, which includes the license to use the software as well as the right to ongoing support and bug patching that normally comes with a Software Maintenance (SWMA) contract attached to a perpetual license to use that IBM i and Db2 for i software into perpetuity on a specific system with a very precise serial number.
Since last year, IBM has been hinting that by the end of this year it would convert the entire IBM i stack to subscription pricing as a means of evening out its revenue stream as well as those of its customers and evening out the charges that customers pay to use the IBM i stack. IBM likes annuity-like revenue streams, and we think customers will grow to like annual and monthly hardware and software bills for their IBM i systems even if it is a blast from the 1960s and 1970s past as well as just the way clouds work these days. To be specific, in May last year, when IBM offered IBM i subscription pricing for the Power S914 with four-cores activated in announcement letter AD22-0508, the company made this statement: “IBM intends to offer subscription term pricing for the IBM i operating system and Licensed Program Products for IBM i across the P05 through P30 IBM i software tiers.”
That is a pretty clear statement, but what IBM did not say at the time is that perpetual software licenses plus Software Maintenance would be phased out. There has been some complaining about this, particularly because it will be a little more costly to pay for subscriptions than for perpetual licenses, and for two reasons. One, because there is no way to get out of paying software maintenance and, two, calculated out over time the price of that underlying software will be a little more expensive because IBM is assuming a four-year replacement cycle instead of a six, seven, or eight year replacement cycle that many IBM i shops – particularly small and medium businesses – assume when they acquire a new Power System machine and slap IBM i on it.
We will be going over the numbers such as we can find them next week as well as talking to the IBM top brass about this, but this week, we just want to walk you through the announcement letters relating to the software subscriptions for the IBM i stack.
On August 29, in announcement letter AD23-0683, IBM continued on this journey to subscription pricing, saying that would offer an upgrade path for customers using perpetual licenses to convert to a subscription license. And to be precise in the wording, the announcement says: “IBM intends to offer IBM i customers a lower priced subscription term option to convert from an IBM i non-expiring license which has associated active Software Maintenance to an IBM i subscription term license.”
That announcement letter reminded us all that IBM i itself was given subscription pricing across all tiers – P05, P10, P20, and P30 – back in February, and further that the Merlin development tool created in conjunction with ARCAD software was given subscription pricing back in February as well (in announcement letter AD23-0067), Rational Development Studio for i was given subscription pricing back in April (in announcement letter AD23-0405), and Rational Developer for i was given subscription pricing back in May (in announcement letter AD23-0157).
In announcement letter AD23-0420, also dated August 29, IBM clarified and slightly revised the subscription options for one configuration of the Power S1014 with four cores activated and two configurations of the Power S1014 with eight cores activated, all of them with the IBM i operating system – be it IBM i 7.3, IBM i 7.4, and IBM i 7.5, which are all supported on the Power10 processor – in their respective P05 and P10 tiers. Maintenance for the software is provided through Power Expert Card Advanced as part of the subscription, but customers can upgrade to Power Expert Care Premium. All of the various options for these three servers are embedded in the announcements, as are the steps to walk through in IBM’s eConfig system configuration tool used by IBM sales reps and those from downstream resellers as well. (Customers do not have access to this tool, sadly.) This is all available on September 12.
That was all the subscription carrot Big Blue is dangling in front of IBM i customers to entice them to move towards subscription pricing, there is announcement AD23-0489, which states: “The IBM i business is known for its adaptability. This has allowed IBM to invest in making IBM i a platform that provides a strong foundation for technical and business innovation, both for IBM and for clients. As the IT industry is moving toward licensing software in a subscription model, the IBM i business is responding to the requests of clients and partners as their businesses follow suit. Subscription licensing offers clients predictable and consistent payment options while maximizing the ability to remain current with their technology. Following these industry trends, in this announcement, IBM will withdraw the ability to acquire non-expiring IBM i entitlements for the P05 and P10 software tiers, effective March 26, 2024.”
So, there you have it. For customers using Power9 or Power10 machinery in the P05 and P10 tiers, March 26, 2024 is the last day you will be able to get perpetual licenses and Software Maintenance on these systems.
We are gathering up information to see what the implications are for this. Stay tuned.