IBM Launches the eServer i5 Model 550 After All

If you got the impression that the eServer i5 Model 550 server was not going to be announced (like I did a month ago) or that it had been pushed out to October (as some business partners believed), you were, like us, wrong. Because today IBM is indeed announcing the four-way tower and rack-mounted i5 Model 550 server. This new server brings the i5 line to parity with the eServer p5 Unix servers, which are also based on the Power5 processors and the Squadron server architecture.

The Model 550 is heavily based on the technology inside the Model 570 that was fleshed out on July 13, and has a pricing and packaging strategy that makes it distinct from the low-end Model 520 and the high-end Model 570. As I expected, the Model 550 is really a Model 570 with its Summit-like clustering features removed so it cannot be extended beyond four-way processing. This four-way max limit is important in the Unix midrange server market, where pricing on the Oracle 9i and 10g databases set the pace. Oracle charges a lot less money for databases licenses on four-way machines than it does on boxes that can expand beyond four-way pricing, and that database can cost more than the Unix server itself at current prices.

Having a stand-alone four-way box seemed less important in the i5 market, since OS/400 shops could just buy a Model 570 machine with either two or four processors activated and pay a little extra for that expansion capability. I have argued that IBM needed an i5 Model 550 for exactly the same reason that the p5 customers do: that there should be a midrange box that costs only a little more than the Model 520 but offers most of the benefits of the Model 570; it needed to be in a low OS/400 software tier that gave DB2/400 similar pricing to Oracle Standard Edition. This is the belly of the market, after all. In July, when I talked to IBM about the roadmap, I was given the strong impression that the Model 550 had been dropped or pushed out significantly. (No one inside of IBM ever just comes and out tells you what the plan is, since plans change all the time.) I was a bit grumpy about this, and said that I believed the Model 550 got stepped on because someone in IBM figured out that making OS/400 shops buy a small Model 570 was going to make IBM and its software partners a lot more money.

It is my guess that customers balked at the P30 software tier that the entry Model 570 had, and that IBM realized it needed to get something in a lower software tier that nonetheless had more oomph than a Model 520. Enter, stage right, the Model 550.

The Model 550 is based on the same four-way chassis as the Model 570, although it is available in both desk-side and rack configurations, while the Model 570 is only available in a rack-mounted version. Both machines use the 1.65 GHz Power5 processors. The Model 570 comes in a version with either one or two processors in the box (that’s two or four Power5 cores)–that’s the Model 570 1/2-way and the Model 570-2/4-way, in IBM parlance. The Model 550 comes with two full processors in the box, and IBM activates two of the four Power5 cores in the base configuration. One of those processors is activated with i5/OS, while the other is left over to run either AIX or Linux, or to be saved for a rainy day when an i5/OS instance is needed to be activated on it. The remaining processor cores can be activated as needed, and customers can pay $45,000 to get a base i5/OS license for those cores. Adding the full “Enterprise Enablement” 5250 processing capability on the cores of the Model 550 costs $100,000 per core, which is a bit less expensive than it is on the Model 570 (except on very large Model 570 configurations, in which IBM just gives it away). You have to license i5/OS on an activated processor core first and then add the Enterprise Enablement.

The Model 550 spans from 3,300 to 12,000 CPWs of raw computing power. It spans up to 64 GB of main memory and can support up to 548 disk drives or 38 TB of disk capacity. The machine supports up to 40 logical partitions and has two HSL-2 I/O loops. By any measure of past AS/400 and iSeries servers, this four-way box is a monster. But compared with modern Xeon or RISC/Unix boxes, this machine is on par, believe it or not. This is not a big box. What can be honestly said is that the 5250 green-screen protocol, and the efficient RPG and COBOL programs that are written for OS/400 to take advantage of it for online transaction processing, make this look like a much bigger box that it is.

The Model 550 is in the P20 software tier, and this is significant. That P20 tier is a lot lower than the P30 software tier for the biggest two-way Model 520 using the same 1.65 GHz and the P30 software tier for the entry Model 570 machines. This jarring difference leads me to believe that midrange shops were balking at paying the P30 charges to upgrade their software, and I am also guessing that application software providers are giving IBM lots of grief because the popularity of the Model 550 might mean that they only sell software at P20 tier prices instead of P30 tier levels. What I would say to the criticism that IBM is undoubtedly taking is that it is far better to get a happy customer paying P20 prices than a customer moving to Windows or Unix.

The Model 550 supports i5/OS Standard Edition, which does not offer 5250 green-screen processing capability. A base Model 550 with two 1.65 GHz cores activated and i5/OS Standard Edition on one of those cores costs $74,000; this price does not, as with the other eServer i5 machines, include charges for base memory or disks. With i5/OS Enterprise Edition on that single processor core, the Model 550 costs $266,000.

With the Model 550, Big Blue is also launching two new editions, which are really nothing more than fancy ways of saying hardware discounts if machines are used for specific workloads. The first is the Model 550 Domino Edition, which is a Model 550 box running i5/OS Standard Edition that activates that second core for i5/OS and costs only $56,000 if customers intend to run Domino R.6 middleware on the box. Customers have to show proof of license for two Domino Server licenses in order to buy this box, and they also must have an aggregate of 1,500 Lotus client licenses; it can be any mix of Notes, SameTime, or QuickPlace clients, and each software client (rather than each user, who may have one, two, or three of these clients) is what is counted. This Domino Edition box is being made available only on the Model 550 at this time, and IBM reckons that the Model 550 Domino Edition costs 48 percent less than buying a Model 550 Standard Edition and activating the second core for i5/OS. (That comparison includes buying Software Maintenance for each box for one year.)

The second new i5 packaging option that IBM is announcing with, and only on, the Model 550 is called the Solution Edition. This variant of the Model 550 is aimed specifically at the core third-party ERP, CRM, and SCM application suites that are written in RPG and maybe a little Java. Because IBM must have gotten some grief from independent software vendors as it pegged the Model 550 as a P20 software tier server, IBM is making it worth their while to get enthusiastically behind the Model 550 by taking the Enterprise Edition and chopping the price on the box if it runs core software suites. The Solution Edition requires that customers buy new licenses to software from the ISVs, but I think there is probably a way to get similar pricing on an upgrade deal. (Most things in the midrange are negotiable.)

While a base Model 550 running i5/OS Enterprise Edition costs $266,000 with two Power5 cores activated and one of them with an i5/OS license, the Solution Edition costs only $206,000. The $60,000 difference is not just a discount; IBM is removing some features from i5/OS Enterprise Edition that are not commonly used by ISVs, such as DB2 Symmetric Multiprocessing, Tivoli Storage Manager, Tivoli Monitoring, and so forth. Guy Paradise, i5 marketing manager at IBM, says that the price decrease is not just the value of the removed software but also includes a discount on the base system. In aggregate, the removal of these software features and the cut on the base server price amount to a 23 percent discount. Unlike the Model 550 running Domino Edition, the second processor is not activated for i5/OS; but, like the Domino Edition, the Solution Edition does not include the cost of application software above and beyond the i5/OS license. This is not the Plug ‘n Go hardware-application software bundle that IBM offered in the early 1990s.

For the Model 550 running i5/OS Solution Edition, Paradise says, IBM approached those OS/400 ISVs that have a worldwide sales and support organization, had signed a strategic SMB alliance with Big Blue, and have a large installed base of OS/400 customers. The ISVs who can peddle the Model 550 Solution Edition alongside IBM include Clear Technologies, International Business Systems, Integrated Distribution Solutions, Intentia International, Lawson Software, Manhattan Associates, MAPICS, PeopleSoft, and SSA Global.

The eServer i5 Model 550 will begin shipping August 31.

In next week’s issue of The Four Hundred, I will go over a few minor announcements that IBM also made today.