i5 Express: The Model 520 Could Be Just the Beginning

If there are two things I find annoying about the computer business, it is that server prices are always given out by vendors as bare-bones machines that can’t do any useful work, and that pricing for any given customer for a real system is based as much on how well they can bargain as it is on the inherent value of the gear they are buying. While I would never advocate not telling the prices for server components, I think that the Express-style pricing bundle IBM has instituted for the eServer i5 is exemplary.

With the Model 520 Express configurations, resellers get decent discounts on reasonably configured machines that are ready to run the workloads of the customers they are aimed at. IBM is requiring that resellers buy them in lots of 20 (in the U.S., Italy, and France, 10 in the rest of the world), which helps smooth out its supply chain and factory operations in Rochester, Minnesota, and Dublin, Ireland. This should mean that IBM is not spending man-hours building each i5 Model 520 from a bill of materials, but mass producing a few models. That translates into less hassle for IBM (and hopefully steady profits even though it is selling Express machines at anywhere from 32 to 38 percent off list price) and less hassle for resellers, who can pitch a configured machines to customers.

The one catch with the Express approach that IBM announced in May with the i5 flavor of the Power5-based “Squadron” servers is we have no idea what the street price for these i5 Model 520 Express configurations will be. Will vendors mark them up, and if so, by how much? It might have been better if IBM actually controlled the street price of the Express configurations and made the reseller discount dependent on how many of these boxes the resellers pushed. But then again, all resellers are on equal footing regarding discounts from IBM on the eServer i5s, and that gives the little guy with a handful of customers as good a chance of selling one of these machines as a bigger reseller. There’s something to be said for that.

As I contemplate the expected i5 Model 550 and think about the Model 570, as it will be expanded up from four-way to 16-way processing, I think that IBM should offer Express configurations right on up the line. At the very least, the Express approach has to be extended to the future Model 550.

The Model 550 is expected to fit into the eServer i5 line right between the Model 520, which can have one or two Power5 processor cores activated, and the Model 570, which can scale from one to four Power5 cores today but which will soon scale to 16 cores. The Model 570 scales to 16 cores by lashing together four 4-way servers that are linked by NUMA-like connections (in a similar manner to that used in the “Summit” xSeries X86 machines). The Model 550 is expected to support a maximum of four processors on two processor cards, and I would guess that it will support 32 GB of main memory per processor card, just like the four-way Model 570 does. Because the yields are higher, I expect that IBM will only use the 1.5 GHz versions of the Power5 chips in the Model 550 box, saving the 1.65 GHz chips for the regular Model 520 and Model 570. As yields ramp up, IBM can add the faster Power5s to the box. If IBM does this, the Model 550 will span between 2,400 and 8,500 CPWs, and will also spans the P10 through P30 software tiers.

I think IBM will create Model 550 Express configurations that have more green-screen processing capabilities than the Model 520 Express configurations do, but like the Model 520 Express configurations, the 5250 performance will be well below the theoretical maximum of the box.

There will obviously be full-blown i5 Model 550 servers that offer all-or-nothing 5250 support, just like some Model 520 machines and the current Model 570 machine do. In that case, the i5/OS edition that customers choose–be it Standard Edition with the 5250 protocol turned off, or Enterprise Edition with 5250 fully activated–is in essence the governor. Based on IBM’s past patterns, I would expect a Model 550 Express machine to cost between $48,000 and $96,000 with a few hundred CPWs of green-screen power activated (120 CPWs and 240 CPWs seems likely), and perhaps 2,000 to 8,500 CPWs of raw CPW power. Those prices would include enough memory and disk plus a tape backup, which makes it a useful machine, and discounts off list price of around 35 percent.

Plain vanilla Model 550s with i5/OS Standard Edition should cost less than the Express models (because they have no 5250 processing), but Enterprise Edition running on the Model 550s could make the base server price go from $100,000 to $390,000. However, remember that plain vanilla Model 550s will not be configured machines. Those prices do not include disk and memory, just the base chassis, power supplies, case, processors, and operating system license.

In any event, IBM seems to have the right idea with the Express machine–build a working configuration and build in the wholesale discount to level the playing field for resellers. Now it needs to take the approach to the core midrange customers and their partners who buy the slightly bigger machines that make up the belly of the OS/400 server market.