Some Clarity – Well Actually Less – On IBM i Subscriptions
March 4, 2024 Timothy Prickett Morgan
As we pointed out a few weeks ago, it looks like at least some aspects of Big Blue’s subscription model for pricing hardware and systems software is a work in progress. We accidentally saw an IBM document dated February 15 that had updated some aspects of the subscription pricing for machines in the IBM i P05 and P10 software tiers and said that others would be updated on May 7.
In the time that it took us to write that story, which wasn’t long, IBM took the PDF down and said that it needed to make edits to that document and that it would be updated on February 20. We didn’t see that happen, but the document is now updated and you can see it here from our site (just in case it changes) and also see it at the link on IBM’s website here.
Additionally, IBM has officially and formally said that the end of IBM i perpetual licenses – which it calls an IBM i non-expiring license for reasons we cannot fathom but we strongly suspect lawyers are involved because we have never heard that term used before – is now May 7, not March 26. That date change was made in announcement letter AD24-0456, dated February 20, and supersedes the software withdrawal announcement letter 923-0489 from August 29, 2023.
It is interesting to us that all talk of moving to subscription pricing for the IBM i stack for the P20 and P30 software tiers has been removed from the IBM i Transformation FAQ. (Compare with the February 15 FAQ, which you can see here.) While customers in these software tiers are outnumbered by those in the P05 and P10 software tiers, the P20 and P30 tiers no doubt drive more revenues for the IBM i platform in terms of both hardware and software. As far as I know, the statements that were made in the February 15 document are consistent with what Big Blue has told us in the past, what we have written about over the past year, and what we actually expect the company do it. It is weird that IBM has removed all of this language. You can see the IBM i Transformation FAQ from February 15 for yourself, which we have saved and which you can download here.
It is probably not a coincidence that the May 7 date for the end of perpetual licenses for the P05 and P10 software is now happening a few weeks before the POWERUp 2024 user group conference being hosted in Fort Worth, Texas, by COMMON and supported by IBM (as usual). And we fully expect more clarity about subscription pricing around that time.
We have what we think is pricing information for all IBM i software tiers, but that is also subject to change. We strongly suspect that the customers in the P20 and P30 tiers are making a big fuss about what amounts to a price increase for the IBM i software stack. As we have shown, the crossover point depends on the number of users or the amount of 5250 entitlement added to the license. We also strongly suspect that IBM is under great pressure to make the software have a crossover point of four to five years instead of three to four years, and also to give the full 5250 enablement as a subscription price, as we showed in our pricing tables in our coverage for IBM i pricing back in February 2023.
We know for sure that many customers are concerned that Big Blue has a kill switch in the IBM i software such that if you don’t pay your subscription then the software stops working. We aim to find out just how IBM is going to handle such a situation. Because for the past 35 years, you could run any IBM i release for as long as you could find iron to support it without paying for more licensing and without having to pay Software Maintenance. This is the big change, too. It is not just about money. It is about no longer being perpetual. Er, non-expiring.
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The interesting this I heard from a client last week is that “This is a major problem for us” referring to the move on P05/P10 to subscription-only. They are one of those customers that keeps their hardware until is starts breaking. (They’re using their 13 year old Power7 as a backup to the couple-year old Power9.) If their software subscription runs out and the license stop working after a grace period, they are going to be pissed off that they can’t just buy this “backhoe” and run it until it dies without having the pay the vig in-perpetuity.
I’m VERY interested knowing how much the up front out of pocket is going to be on a 20-person or less shop for a new system before you start paying the subscription fees. I mean this isn’t Office 365 where you don’t have the big hardware cost. I think IBM confuses IBM i O/S with and end-user application.
Does Linux do this? Does Windows? Does Mac OS? Nope, just IBM i.
Customers were content with an up front cost and then SWMA at 15% (although I know some greedy ISVs were moving to 18 to 20%) annually. If they didn’t pay the SWMA, they’d pay extra when replacing their current system and wouldn’t get support. That’s our culture.
Perhaps we just need to see these signs as just a warning that this change is coming and not worry about it. If you’re on V7R3 or later, you really haven’t seen any worth upgrading in years. I mean, not really. To me, SWMA was so that we developers could report bugs in IBM i — now they want us to not only pay them for the privileged, but rolling in the use of the OS on top if it? I’ll have to wait until the dust has settled to predict if that’s going to be something rolled back in 6 months or a new way of life in our micro-market space.
I think the other option was for IBM to double the price of IBM i and require SWMA. And that might be more expensive than this. And I would not be surprised if that happens as a carrot that is big enough to use as a stick.
Excellent update
we need to frame it in all the recent interventions, see “voluntary layoff” plan.
cost cutting, profit optimizations? Feudal tyranny of the shareholders?
Saving IBM, from IBM, again? becoming a license tax collector, like *racle?
Unfortunately, engineering an OS is a long term endevour, like building a city, not compatible the the short term presence of a CIO/CEO and their bonus horizon.