• United States

IBM cuts mainframe software/hardware pricing

Sep 01, 20034 mins

IBM is reducing hardware and software costs by as much as 80% with an eye toward making it easier for businesses to buy and deploy Big Iron.

IBM is reducing hardware and software costs by as much as 80% with an eye toward making it easier for businesses to buy and deploy big iron.

IBM says it hopes the pricing moves – which create set list prices for mainframes and related software that typically are sold on a customized and sometimes complex basis – will encourage users to buy its newest, largest mainframe. IBM is looking for customers to use its new mainframes to support Web applications and act as a cornerstone for on-demand computing initiatives.

The revamped pricing includes cuts in the hardware costs, including memory, as well as for software licenses for applications such as SAP and Siebel running on the z/OS operating system. In addition to the price reductions, IBM announced an updated base configuration for the z990, its most powerful mainframe, which will double memory to 16G bytes without a price increase.

“IBM is saying, ‘Look, this is something we’re well-known for. We’ve helped this thing continue to evolve, and we’re planning on continuing to develop the mainframe platform for the foreseeable future. And by the way, we’re pricing this stuff so that if you thought you couldn’t afford it before, you need to take another look,'” says Charles King, a research director at Sageza.

Further, IBM plans to expand the on/off capacity on-demand features – which let users temporarily activate and deactivate computing power – in the mainframe to include Linux processor engines. When the z990 was launched in May, the on-demand feature was available only for general-purpose processor engines. An on/off capacity on demand software option also is expected to be available this month, when the product is set the ship.

The idea is to get customers to make broader use of mainframes in the data center by, for example, moving Web-based applications such as Siebel and SAP onto the mainframe rather than running them on Unix boxes from HP or Sun.

Bob Massengill, manager of technical services at Wake Forest University Baptist Medical Center in Winston-Salem, N.C., says he is pleased with the price cuts IBM is offering, but says the mainframe in his data center runs only legacy applications.

“We have not really investigated much into Web-based applications,” he says. “We are looking and playing with Linux on the mainframe though, but not sure yet how far that is going to go.” 

Main attraction

IBM hopes revamped pricing will help attract customers to its mainframe products.
Memory: List price is now $10,000 per gigabyte. In the past, pricing was customized but landed around $20,000 per gigabyte and up.
Specialized Linux  processor engine [Integrated Facility for Linux]: List price is now $125,000 per engine across the zSeries line. In the past, IFL prices varied depending on model. For example, a z900 IFL costing between $180,000 and $200,000.
Application license fee for z/OS: Beginning in October, the z/OS new application license charge will be $36 per millions of service units (MSU), which is how IBM prices software on the mainframe. In the past, z/OS applications were priced at $191 per MSU.

Gartner analysts state in a recent research note on IBM’s mainframe strategy that the changes “suggest that IBM may be a bit nervous that the z990 will not give it the sustained revenue boost it would like heading into the fourth quarter of fiscal 2003.”

To further entice customers, IBM offers a rebate on the z990.

“Our objective is to free up funds. . . . Customers’ budgets aren’t growing, and they need to find ways to free up funds to invest in other areas,” says Peter McCaffrey, product manager for IBM eServer zSeries.

“With this promotional offering they buy a z990 – we’re encouraging the z990 as the centerpiece of the on-demand infrastructure – and provide a rebate credit that can be applied to a host of different on-demand technologies like our WebSphere products, like our BladeCenter technologies, like our services.”