Aussies And Kiwis Get Killer Power 720 Bundle

September 12, 2011 Timothy Prickett Morgan

The exploding Chinese economy has been a boon for both Australia and New Zealand, which sit close together and are packed with food and raw materials that the Chinese economy needs. New Zealand has suffered an earthquake that has literally and economically rattled the country, but it is running trade surpluses according to The Economist. Like its larger neighbor, Australia, and the United States, New Zealand has its own deficit spending and housing bubble, too. But both Australia and New Zealand managed to escape the clutches of the Great Recession.

Given all this, I found the announcement of a killer deal on the Power 720 server from IBM, available only in Australia and New Zealand, a bit perplexing. Perhaps someone at a big company Down Under has had the All Blacks rugby team perform the Maori Haka war dance to the local IBM sales reps to demonstrate that they needed a better deal?

The Australian Power 720 deal is in announcement letter A311-100A and the similar deal in New Zealand is in announcement letter NZ311-100A. The deals, which are sold under the “IBM Power 720 – Reliability at the Right Price” slogan, offer customers a preconfigured Power 720 Express system running the PowerVM Express Edition hypervisor and the AIX Standard Edition operating system for $9,999 Australian including GST taxes. This machine, which is an 8202-E4B machine with four 3 GHz cores activated, 16 GB of main memory, and a 146 GB disk drive with three years of Software Maintenance has a list price of $26,844.40 Australian including those GST taxes. That works out to a 62.8 percent discount. If you want to move up to PowerVM Standard Edition hypervisor, which scales further in terms of the number of logical partitions, then list price is $30,122.40 Australian but IBM is letting customers have it for $10,998 Australia. That’s a whopping 63.5 percent discount.

In New Zealand, the same exact configuration of the Power 720 using PowerVM Express Edition costs $27,905 New Zealand dollars and is selling with a 56.5 percent discount; the machine with PowerVM Standard Edition lists for $31,221 New Zealand dollars and has a deal price that is 57.3 percent lower at $13,344.97 in New Zealand dollars.

I’d like to make a couple of observations here. First, I know what you are thinking. At these prices, IBM has just created a gray market in machines that will be bought in Australia and New Zealand and will make their way to the United States, Canada, and Europe. At current exchange rates between the U.S., Australian, and New Zealand dollars, the machines are roughly the same price. (There’s a 20 percent currency spread, with the Aussie dollar being worth about 6 percent more than the U.S. dollar and the Kiwi dollar being worth about 15 percent less.) When I went through IBM’s pricing and priced up the two Power 720 AIX configurations using IBM list prices, I got $12,020 for the version running PowerVM Express and $13,208 for the one running PowerVM Standard. Add in sales taxes and that is in the ballpark of what Aussies and Kiwis are paying when converted to U.S. dollars after the hefty discounts are applied. (If I don’t have the math right, let me know.)

So the real question might be why did IBM think it could charge so much for AIX systems in Australia and New Zealand? And was there a gray market of machines flowing from the United States to our friends down under? At that price, I would put one in my suitcase and fly to visit ANZ myself. (Well, not really. When I go, I am going for the rugby, the beer, and the good times.)

The other thing I want to remind the good people of Australia and New Zealand about is that if IBM is willing to give such a deal for customers running AIX, it damned well better be giving it for customers running IBM i. It costs $2,245 per core (with only 90 days of SWMA) in the United States to activate IBM i 6.1 or 7.1 on those four Power7 cores in the Power 720 server.

This promotional price on the Power 720 running AIX and PowerVM runs from September 2 through December 16. Although I have a feeling the price will never go back up again no matter what the announcement letters say now that the cat is out of the bag on the price disparity.