i5 Memory and Disk Prices Need to Come Down

Over the past few weeks, I have presented a bunch of stories that have profiled the cost of AS/400e, iSeries, iSeries i5, and System i5 servers over time. The comparisons looked at the cost and performance of barebones servers as well as reasonable base configurations with various amounts of 5250 processing capacity on them. But the server is only a third of the story. At its most basic level, a system is comprised of a processor, its memory, and its disk storage, and ignoring software–which is almost always a good thing to do, if you ask me–these three items make up the largest part of a system acquisition.

So this week, I want to take a look at memory and disk drive costs through the years. And rather than stretch back to the dawn of time, with the launch of the AS/400 in 1988, I gathered up information for the generations of OS/400 platforms that have been selling since the turn of the millennium.

As is my habit, I built a table, in this case, one that shows memory and disk drive costs for an entry and a midrange machine through four OS/400 server generations. I picked these two sizes of machines because such boxes make up the bulk of the OS/400 server sales in any given generation. Moreover, the high-end servers typically have much more advanced and wickedly more expensive main memory cards. But, since very few customers buy such OS/400 servers, it doesn’t really make up a large portion of the base. And to be honest, all of the makers of so-called enterprise class servers (as if your business, no matter how small, is not an enterprise) charge a heck of a lot of dough for the memory in their biggest servers, so much so that in a heavily configured machine, memory often costs more than the processor complex. And when you add in a lot of disk storage, it is not hard for memory and disk storage to comprise three-quarters of the cost of a complete system, which includes an operating and, in the case of the System i5 and its predecessors, an integrated relational database management system.

Well, there’s good news and then there is news that is waiting for IBM to take some action and therefore make it good. The good news is that memory and disk prices sure have come down a lot in the past six years. The bad news–which can be converted into good news, mind you, with a few slashes on the price list–is that prices are still too high relative to the platforms that the System i5 competes with in the server market.

First, the good news. Good heavens, memory used to be expensive, and it is no wonder OS/400 shops looked at Java and anyone who was talking about using it to make ERP applications as if they had lost their minds. Back in August 1999, when the PowerPC “Northstar” AS/400e machines were announced–these were the first boxes that were also rebranded as the RS/6000 and also ran IBM’s AIX flavor of Unix–you could not even get a 1 GB stick of memory for these servers, and to get an 8 GB block of memory on a Model 730 machine (which topped out at 24 GB), you had to buy 16 512 MB memory sticks, which cost a stunning $147,456 at IBM list price. When you do the math, as I often do, that works out to $18,432 per GB. Now, on the Model 270 entry server that was announced the following summer in 2000, two 512 MB memory stocks cost $4,096, which obviously works out to $4,096 per GB. This is obviously a lot better on the price per GB basis, but it is still very expensive for a box that IBM wants to promote Java, Domino, and other memory-hungry workloads on. The difference in memory costs for entry and midrange machines was a factor of 4.5.

At the time, disks came in 8.6 GB and 17.5 GB capacities and they spun at 10K RPM. An 8.6 GB disk cost $2,000 and a 17.5 GB disk cost $3,600, which worked out to $233 and $206 per GB, respectively. As is always the case, memory capacity is a lot faster than disk capacity–roughly 1,000 times–and as you might expect, it costs at least that much more to buy any given amount of main memory capacity compared to the cost of buying disk capacity. On these AS/400e machines (rebranded as the iSeries), that difference was more like a factor of 20 between memory costs and disk costs per GB. On the bigger Model 730 machine, which had a blazing 560 to 2890 CPWs of performance, the difference between memory and disk costs is more like a factor of 80 to 90.

With the testing of “Green Streak” pricing in 2002, where IBM cut the prices of iSeries 270 and 820 servers in half in special cases and slashed memory and disk prices, the company learned the lesson of price elasticity. If you cut prices, more people will buy, and if you do it right, you get to keep the same or more money and expand your customer base. With the iSeries revamp in January 2003, IBM moved to Power4 processors and once again reduced memory and disk prices. A 1 GB memory card on a Model 810 entry machine cost $3,226, while a 1 GB card on the midrange Model 870 box cost $99,533. That’s a 21 percent decrease in memory prices for the entry 810 machine and a 32 percent decrease for the midrange 870 machine. Disk prices were slashed incredibly, and IBM rolled out 15K RPM disks alongside older 10K RPM units. Depending on the capacity and speed of the disks, IBM was charging from $51 to $80 per GB, which is a huge decrease in price, to IBM’s credit. But, alas, as is always the case, IBM continued to charge way above market prices for raw disk drives and for nearly identical units in its pSeries Unix server line and xSeries X86 server line.

This kind of strategy really annoys me. But, with so many plug compatible equipment makers having been chased out of the OS/400 server market, customers really don’t have any choice but to negotiate the best discounts they can get from IBM and its reseller partners or move to other platforms. Some did the former, some did the latter.

With the May 2004 launch of the iSeries i5 and pSeries p5 servers, based on the Power5 processors, IBM did something many of us have been asking it to do since these two product lines had started converging five years earlier: charge the same price for memory and disks regardless of what box these electronics plugged into. IBM moved to DDR main memory with the i5s and p5s, and used essentially the same memory technology across all but the largest i5 and p5 machines. By doing this, not only could Big Blue get the i5 and p5 prices in parity, but it could make prices competitive (more or less) with alternative, non-IBM platforms. On the i5 520 entry machine, a 1 GB memory stick cost $1,450, or $1,450 per GB (yes, I love doing that), while on an i5 570 an 8 GB stick cost $15,613, or $1,952 per GB. Entry memory prices were cut in half, but still too high compared to ECC main memory on X86 servers in my opinion. The memory price cuts on the midrange machines were important, and large, and needed to make these boxes more suitable for server consolidation. You can’t expect someone to collapse eight servers onto a box and then charge him four, five, or six times as much per GB for main memory. With the i5 launch in May 2004, disk prices came down about 20 percent again, and no new technology really came to market.

Because IBM likes a good joke, while it brought the i5 and p5 in line with memory and disk pricing, in September 2004 it launched the OpenPower Linux-only servers, and promptly gave them much lower memory and disk prices for exactly and precisely the same hardware. And when I say much lower, I mean much lower. On the initial OpenPowers, main memory cost from $640 for a 1 GB stick (42 percent cheaper than on the i5 and p5 machines at the time) to $2,800 for a 4 GB stick (21 percent cheaper). 10K RPM disk drives ranged in price from $275 for a 36 GB disk to $699 for a 146 GB disk. IBM is charging between 63 and 69 percent less for these disks than it does for i5 and p5 machines, and with 15K RPM disks, IBM has slashed the prices by 72 to 74 percent.

Do you think OS/400 shops would like such prices?

This January, with the Power5+ server launch, IBM moved to DDR2 main memory and on entry machines, slashed the cost of a 1 GB memory stick to $550, or $550 per GB, down by nearly two-thirds. This is a big, big improvement. Denser cards for the i5 570 line are still pricey, with an 8 GB card costing $12,375, or $1,547 per GB. And prices on IBM’s 70.6 GB, 15K RPM disk drives fell to $1,999, or $28 per GB; less capacious 35.2 GB, 15K RPM disks cost $1,199, or $34 per GB. IBM also announced a 146.8 GB disk, which is only able to be used by AIX or Linux partitions on the i5 machines (for reasons I do not understand) at a cost of $1,499, or about $10 per GB. This is the lowest price disk drive the OS/400 server market has ever seen, and it is unfortunate that OS/400 can’t see it.

Grrrrrr.

While I am growling, let’s talk a bit about the competition that the System i5 faces and what memory sticks and disk drives costs in these machines. In a ProLiant DL380 G4, which uses PC2-3200 DRR2 main memory running at 400 MHz–this is top-of-the-line stuff–Hewlett-Packard is charging $299 per GB. And this machine is in roughly the same power class as the i5 520, and could even best it when affordable dual-core X64 processors come to market later this year from Intel. On HP’s Opteron-based ProLiant DL 585, the machine is apparently having some heating issues, since it will only support the maximum of 128 GB of main memory using DDR PC2700 sticks running at 266 MHz; if you want to use 400 MHz DDR PC3200 main memory, you have to cut back to 32 GB capacity. (You can see now why AMD is working to get DDR2 main memory into the “Rev F” Opterons, which are due in the third quarter.) Anyway, in this machine, a 4 GB of memory (which is two 2 GB sticks) costs about $475 per GB. So, HP’s entry servers cost about half the price of the entry i5 main memory and the high end memory costs about a third that of the equivalent i5.

So what can you do?

Well, there is still one clone i5 memory provider out there: GST, which is probably better known for its tape and disk arrays than main memory. But, the company has sold main memory for AS/400 servers way back when (when it was actually a different company, BCC Technologies) and GST has sold iSeries and pSeries memory and now sells i5 and p5 memory. While GST’s list pricing is for i5 520 servers is the same as IBM’s–and you can bet there is some wiggle room in there and that GST will take your old memory in trade if you upgrade–the company’s pricing on denser memory cards is a lot lower than IBM’s. For instance, an 8 GB for an i5 570 costs $2,650, or $331 per MB. That is less per GB than HP is charging on its big Opteron box, and it is about a fifth the price that IBM is trying to charge.

On the disk front, HP’s pricing for disks–which is reasonable–make the prices IBM is trying to charge for the i5 look completely silly. A 36GB, 15K RPM disk for a ProLiant server costs $269, and a 72 GB, 15K RPM disk costs $419. HP’s 146 GB, 15K disk costs $709, and a slower 10K RPM disk with a 300 GB capacity costs $779. While the i5 has shown incremental improvement, IBM is charging nearly five times what HP charges for essentially the same disk.

Grrrrrr.

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