Details On The IBM i Subscription Conversion Deals For P05 And P10 Tiers

April 8, 2024 Timothy Prickett Morgan

As you are well aware by now, Big Blue is in the middle of changing from perpetual licensing plus Software Maintenance for the IBM i stack to subscription pricing that includes licensing and tech support for the software all in one annual subscription. And this is happening at the same time that IBM has raised software prices and maintenance prices for that software across the board, which we will report on separately, and the company has said that it will withdraw new perpetual software license software sales for IBM i on its Power Systems line on May 27.

That withdrawal of perpetual software licenses for IBM i was originally slated for March 26, but was moved out earlier this year as Big Blue, its partners, and its customers needed more time to sort this all out and put together a conversion offering that would be appealing to entry system users – who represent the majority of the IBM i base – to help them make the transition to subscriptions.

For this story, let’s just stick to script and cover the P05 and P10 tier subscription pricing for Power9 and Power10 machines and the conversion offering, which was revealed – well not really all that much was revealed – in announcement letter AD24-0484 on April 2. The unwieldy title of this announcement – IBM i converts non-expiring licenses to Subscription term at a lower-priced Subscription option on purchases of specific IBM Power10 processor-based servers at P05 and P10 software tiers – comprises the bulk of the announcement letter aside from a feature code table that does not have pricing. In the announcement letter, IBM does remind customers that they cannot transfer their existing IBM i perpetual licenses – be they for IBM i 7.3, IBM i 7.4, or IBM i 7.5 – to a Power10 machine after May 7. But customers who acquire a new (or presumably secondhand if they can find one) Power10 machine can buy a whole new subscription for the machine (which no one is advising) or convert their existing perpetual licenses to subscriptions.

Maddeningly, IBM is using the words conversion and transfer in its description of the announcement. You can’t transfer your perpetual license, but you can transfer your user entitlements. Although the announcement letter doesn’t say this explicitly.

Douglas Gibbs, one of the IBM i offering managers, and Steve Sibley, vice president and global offering manager for Power Systems, were good enough to reach out to us with the actual current pricing for both perpetual licenses and subscription licenses for the P05 and P10 tiers, which will apply to all current IBM i releases under standard or extended support. Just so you are not confused, sometime last year IBM rebranded the word “perpetual” to “non-expiring” for some reason that no doubt has to do with lawyers. Or marketeers. No one uses the term “non-expiring software license” as far as we are aware.

Gibbs and Sibley also gave us the rundown on the subscription conversion deal, which is different for the P05 tier and the P10 tier, but the way.

As a reminder, the IBM i conversion offering applies to the following Power10 machines when they are bought new to replace a prior Power Systems machine of any vintage:

(9105-41B) 4-core processor (P05 software tier)
Power S1014 (9105-41B) 8-core processor (P10 software tier)
Power S1022 (9105-22A) (P10 software tier)
Power S1022s (9105-22B) (P10 software tier)

Here’s the deal on the P05 conversion to subscription:

Click to enlarge.

After the price changes that went into effect on January 1, a perpetual license to IBM i cost $3,315 per core in the P05 tier plus $318 per user. An annual subscription for IBM i costs $2,356 per core, and users cost $80 a pop per year, with a $4,000 fee per year for an unlimited number of users. The unlimited user price for a perpetual license was for 75 users and above, and now for subscriptions it is set at 50 users and above.

When Gibbs went over this chart above with me on the Webex, it was so small I could not read it, and frankly I thought I understood it then, but I don’t now that I look at it carefully. And it is Spring Break, and the kids are being noisy, and the dogs are crazy, and the sun is out. I will figure it out and do my own comparisons as soon as I understand what the heck is going on in this table. But I thought you needed to see this now.

If I am reading this right, the only deal for the P05 customers is that there is a lower limit where you reach unlimited users.

Now, let’s take a look at the P10 tier conversion:

Click to enlarge.

This looks like there is a price break. After the January price hikes, a perpetual license to IBM i costs $15,895 per core and users cost the same $318 each. If you want an unlimited user license, it would cost $63,600. With the current pricing on subscriptions, a P10 machine’s IBM i license costs $8,925 per core per year plus $80 per user (sold in blocks of ten) with $16,000 per year for unlimited users. (That is a crossover of 200 users.) With the special subscription conversion deal, IBM will give you the IBM i license for $7,140 per core, which is a 20 percent discount. IBM is chopping the hell out of user costs on the P10 machine, from $80 each down to $10 each as part of the conversion deal, which is an 87.5 percent discount. Unlimited users can be had for $2,000 at the same steep discount level.

So, why aren’t the P05 customers getting the same deal on users? Well, we think it is because the per-core base price of IBM i is 2.7X cheaper on the P05 tier than it is on the P10 tier. (To be fair, with perpetual licenses, the gap between the core price on the P05 machine and the core price on the P10 machine was, at $3,315 versus $15,895, a much wider at 4.8X. So in a way, the P05 tier is much more expensive relative to the P10 tier now.

What seems obvious is that if you are going to convert from perpetual to subscription, you should do the five-year deal and maximize that discount to the fullest in the P10 tier.

We are going to have a think on this and do some spreadsheet work and make sure we have understood this correctly.

3 thoughts on “Details On The IBM i Subscription Conversion Deals For P05 And P10 Tiers”

ema tissani says:

April 3, 2024 at 4:50 am

Time to convert your non-expiring to non-non-expiring with the turboencabulator cabrio converter with intercooler option, then!
Such innovations coming in the IBMi world, and we complain!

Douglas Bridwell says:

April 8, 2024 at 10:11 am

Please fix the “click to enlarge” for the second chart.

Timothy Prickett Morgan says:

April 10, 2024 at 10:13 am

All fixed.

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