Now, IBM Is Jacking Up Hardware Maintenance Prices
June 16, 2025 Timothy Prickett Morgan
The first stirrings of hardware maintenance price increases that will affect IBM Power Systems shops have hit, starting in China for Power8 and Power9 machines and for Storage Expert Care support everywhere around the world except in Japan.
To be quite honest, when we read the hardware maintenance price increase in announcement letter AD25-1195, we did not at first see that it was restricted to the People’s Republic Of China and assumed that it was for the United States and quite possibly for the entire planet. But, alas and good for everyone outside of China, the 10 percent price increase for hardware maintenance on Power8 and Power9 iron is restricted to the Middle Kingdom.
For now, anyway.
The hardware maintenance price hike on Power Systems iron was announced on June 13 and will go into effect on July 15.
We fully expect for a more general price increase for Power Systems hardware maintenance around the world, and this chart below explains why:
This chart plots out IBM’s System Z and Power Systems hardware and operating systems sales added to its Storage division revenues each quarter – what IBM calls Hybrid Infrastructure for reasons that are not entirely clear to us – against its Infrastructure Support revenues each quarter. This data runs from Q1 2019 through Q1 2025, which is the length of time that Big Blue has characterized its financial results in this fashion.
We are not trying to jinx your budget, but if you compare calendar 2019 to calendar 2024, Hybrid Infrastructure revenues have dropped 3.4 percent, from $9.18 billion to $8.86 billion, which frankly is not that bad of a drop. But Infrastructure Support revenues have decreased by 21.8 percent in that time, from $6.6 billion in 2019 to $5.16 billion in 2024. This is a steady and significant drop in revenues, and very likely profits, since tech support is a profit generator. Support has dropped from 41.8 percent of total IBM Systems revenues in 2019 to only 36.8 percent in 2024. Just to get back to 2022 revenue levels for support, which is before the Kyndryl spinout hurt tech support revenues we think, IBM would have to raise prices by 27.9 percent and keep all of its customers. Raising tech support prices for the whole world by 10 percent would only boost Infrastructure Support revenues to $5.67 billion – nowhere near the $6.6 billion in tech support revenues IBM raked in back in 2024. To be fair, IBM was supporting a lot of non-IBM gear back then, too, in addition to stuff rented out or outsourced through Global Services.
Given the opportunistic pricing we see happening all around the economy, it is amazing to us that IBM has not already increased hardware maintenance prices on Power Systems and System z hardware as it has done for Storage Expert Care hardware in announcement letter AD25-119. That price change, which was not specified, is for the entire world except Japan. It is weird that it doesn’t say how much of an increase in storage tech support was instituted. But we do know that it covers DS8000 storage arrays.
We are also surprised that it is not for all Storage products, to be honest.
That chart above tells us that IBM will raise maintenance prices to try to boost system revenues and profits. We are amazed it has not happened already. Perhaps this will happen after the Power11 machines are launched, being used as a stick to drive customers from Power8, Power9, and Power10 machines to the new Power11 iron. This would not be the first time this carrot and stick approach has been used by Big Blue.
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My experience, after 4 years of ownership of a particular IBM storage array, out of the blue, and I’ve always valued IBM to provide longer services than the average company (and they don’t have so many models nowadays…), I received a letter from IBM stating that I cannot longer renew the support, even hardware support.
Not a 10 yo array, a 4 yo.
I guess modern times.
Being unexpected and out of planned budget, I subscribed with a third party for hardware support, to extend the lifetime of the machine.
I would have gladly given money to IBM, but cannot.
Apparently, the third party have better inventory management and working capital optimization than the producer of the good. Not a good advertisement for a company pushing tech an AI “business optimizations”.