IBM Adds Power7 Boxes to Trade-In Deals

June 21, 2010 Timothy Prickett Morgan

Well, it looks like IBM is having a little more trouble moving the Power7-based midrange servers it announced back in February than it anticipated. A long-running trade-in deal allows customers to get cashish as they dump older Power-based machines or competitive Unix and proprietary boxes. The deals are technically trade-in rebates, but the practice among Big Blue’s channel partners is to flip them around instantly so they work like discounts. The trade-in deals now include the new Power 750, 770, and 780 servers.

The latest incarnation of the entry Power Systems trade-in deal from last week in announcement letter 310-205 was aimed at shops buying Power 520, 550, and 560 servers, and now includes rebates for those buying Power 750 machines. This deal was tweaked last in announcement letter 310-110 from January 10 of this year, which was itself an updated version of the deal that came out on July 21, 2009, adding AS/400 and iSeries machines as the replacement boxes to a long-running Unix replacement deal that IBM has used for many years in an on-again, off-again fashion to peddle boxes. The way these deals work is this: there is a list of replaced machines and a trade-on amount IBM is willing to pay for each box you take out, and a maximum trade-in you can claim based on a specific configuration of a new box. You can get rid of multiple old boxes and gang up the credits, but there is a ceiling imposed based on the box you are buying.

So, for instance, on takeouts of vintage AS/400 and iSeries iron, IBM was offering anywhere from $250 to $1,500 per machine; the ceiling on new Power 520, 550, and 560 machines ranged from $500 on a Power 520 with a single 4.2 GHz Power5+ core to $16,000 on a 16-way Power 560 using 3.6 GHz Power6+ cores.

This time around, IBM has thinned out some of the configurations that are eligible target machines for the trade-in credits and has also reduced the ceiling for the trade-ins on the older Power6+ iron. There is no single-core Power 520 that is eligible for the deal–which is no big deal, since IBM was only giving a $500 credit, for instance, and the trade-in ceiling on the Power6+ machines now ranges from $1,000 (the same as it was before) to $10,000 for the big Power 560 machine. On the Power 750, the trade-in ceiling runs from $2,000 on a single eight-way machine to $12,000 on a 32-core machine using either 3.3 GHz or 3.55 GHz Power7 processors.

To hit these limits, you’d have to consolidate a lot of local or remote AS/400 and i boxes into a data center with the Power 750. Which means this is really a deal aimed at competitive takeouts of multiple Unix machines from Hewlett-Packard, Oracle, and Fujitsu. IBM could just treat the trade-in ceilings as a discount, and if I were buying a new Power 750 machine, I would tell IBM that I want whatever the trade-in ceiling is for any box I was buying, regardless of what or how many AS/400 or iSeries machines I was replacing.

The Power 570 trade-in promotion that was last tweaked in November last year never did include AS/400 boxes as takeout machines, but as I have said before, whatever benefits the pSeries and System p shops are getting, the iSeries and System i shops should demand. And so if you are looking at a Power 570, 770, or 780 box and you have an old AS/400, iSeries, or System i box you are getting rid of, you should demand the trade-in rebate associated with the machine you are acquiring, as shown in announcement letter 310-206 from last week.

On older Power6 and Power6+ versions of the Power 570, the trade-in ceilings range from $5,000 on a machine with four or seven cores to $40,000 with 32 cores. On Power 770 machines, the ceilings range from $2,000 on a machine with six cores activated to $20,000 on a box with 48 cores turned on. The ceilings on the Power 780 (which is the machine that has the Turbo Core mode, where you turn off half the cores and can boost the clock speed on the remaining cores from 3.8 GHz to 4.14 GHz) range from $3,000 on a box with four cores turned on to $40,000 on a 64-core box. IBM is giving better trade-ins per machine on older p650, p670, p690, p5 560 and p5 570 machines in terms of cash value compared to the deal outlined above, ranging from $2,500 to $38,000 per box depending on what it is and its configuration. The deals are a little better on the takeouts of HP, Oracle, and Fujitsu iron, too. But just as in the deal above, I think shoppers should just look at the ceiling IBM is offering and consider that a nice place to start bargaining.

It is hard to say how good or bad a deal these trade-ins are since IBM has not published prices for the Power 750, 770, or 780 machines, but I will be finding out what they cost and doing price/performance analysis on them in the coming weeks. Fear not.

One more thing: Where are the trade-ins for i shops customers buying Power Systems 700, 701, or 702 blade servers using the new Power7 chips?

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