Details Emerge on Possible “Work Stream” Entry i5 Server

October 9, 2006 Timothy Prickett Morgan

Many of us in the i5/OS and OS/400 community have been asking IBM to take the fight for customers’ hearts, minds, and budget dollars directly to Microsoft‘s Windows stack. At the COMMON user group meeting a few weeks ago, IBM’s top brass hinted that they were thinking about a more aggressive i5 machine or line, possibly code-named “Work Stream,” to go into smaller shops and win some deals. Apparently, IBM is listening, and details on the Work Stream project have surfaced.

So what is Work Stream? Well, the code name certainly is a bit odd, but fishing could be called working a stream, and IBM is fishing for ideas about how to fish for new customers in the SMB space where Microsoft has near total control. Work Stream also has the same initial capital letters as Windows Server, but that may not mean anything. At COMMON, Mark Shearer, general manager of the System i division didn’t say much about the Work Stream project. But the descriptions he gave are two things I have argued for in this newsletter for many years: the OS/400 and i5/OS platform, delivered as a service, not as a product, and a system that is capped by the number of users rather than the CPW performance.

“I am not announcing anything,” Shearer said. “Let me tell you the kinds of things customers have asked for. We are sort of determining the path we are going to take. At the low end, one set of clients would like me to deliver System i capability as a network service. So they would not even have to install the system to get the first five users. This is a System i pay-as-you-go, by-the-user, and on the network.”

That’s one idea. And then Shearer went on to explain the other idea. “Some clients have asked us to consider–a lot of the solution providers tell me that we’d be a lot more competitive on the low end if we packaged our offering and charged by user rather than a fixed fee for a model. They are interested in a per-month, per-user charge for the hardware rather than selling it in a traditional way. Others in the industry have user-based pricing schemes. If you have five users, it costs this much. If you have 100 users, it costs that much. The ISVs suggest that could make the platform a lot more attractive if they had the pricing aligned with the value they were getting from it based on the number of users.”

The Work Stream product I have caught wind of sounds like the latter rather than the former. According to sources familiar with IBM’s plans, IBM has created an entry i5 520 server with a single 1.9 GHz Power5+ core activated, rated at 3,800 CPWs. This machine has the full 36 MB L3 cache for the core turned on, which is important for running IBM’s WebSphere Application Server, but is not configured with any 5250 green-screen capacity activated. Apparently, green-screen capacity cannot be activated on such a box, either, but it is my guess that if customers use WebFacing, HATS, or an approved third-party tool to Webify their green-screen applications, the applications will work just fine on this box. This machine will come with 2 GB of main memory and four disk drives. I would guess that these are 70.5 GB disk drives, since IBM is trying to move away from the 35.4 GB disks in all of its server products. Rather than having a governor on CPW performance, this machine will have a governor on the number of users attached to the box. Specifically, it will cap out at 20 users. This is the first time IBM has capped a machine’s price based on users.

Perhaps the most interesting thing I have heard is that such a machine will, with i5/OS and DB2/400 included and probably WebSphere Express and a bunch of other systems software, cost under $10,000. (It is possible that this price is just for the base hardware and software, not including memory and disks.)

The word on the street that I hear is that this particular Work Stream offering will only be available to a select few customers this year as IBM tests out the idea–much as it did with the “Green Streak” pricing promotion in late 2002 that eventually caused the complete revamping of the iSeries product line’s pricing and packaging in January 2003. If the initial marketing pans out, then this Work Stream offering could go into the official System i5 product catalog.

If this pricing information turns out to be real, this would be a dramatic shift. Last July, when IBM announced the i5 520 for EnetrpriseOne in partnership with Oracle, the same base box had a list price of $24,900, not including memory and disks. With 8 GB of memory, a RAID 5 disk controller, and a 16-pack of 35.4 GB disks at half price, this Solution Edition cost $36,195 and was apparently geared to support 100 JDE EnterpriseOne users. (That is a high number of users, I think.) That was $362 per seat. If the Work Stream box comes in at $10,000 for 20 seats, that costs $500 a seat.

Windows machines with similar performance, memory, and disk arms, as my analysis showed last summer, are not as inexpensive as you might think once you have to add a lot of memory and disk to the box. With a virtual machine hypervisor and real disk arrays, a Wintel box from Hewlett-Packard based on the new “Woodcrest” chip running at 1.86 GHz could probably support 100 users, and that box cost $31,930, or $319 per user.

To work backwards from this, you could get a Windows box with a similar configuration to the proposed Work Stream i5 520 server. But it would be comparatively expensive. The server would cost $3,139, 2 GB of memory would cost $709, four 36 GB disks would cost $1,116, Windows Server 2003 Enterprise Edition would cost $3,999 with another $600 for Client Access licenses, SQL Server 2005 would cost $5,999, and VMware‘s ESX Server 3 virtual machine hypervisor would cost $5,750. That works out to $21,312, or $1,066 per seat.

Of course, you could go with the much cheaper Windows stack, too, which any SMB customer would, since it provides functionality that is more appropriate to an SMB shop. So instead of Windows Server 2003 Enterprise Edition, you switch to Windows Server 2003 Standard Edition, which costs $1,999 and SQL Server 2005 Workgroup Edition, which costs $3,899. And you ditch VMware ESX Server 3.0 and use the free Virtual Server 2005 hypervisor from Microsoft. That makes this Windows box come in at $11,462, or $573 per seat.

This would be a competitively priced System i5 box, and I think IBM will probably rethink the pricing and shoot for a $14,900 list price based on this. I have never seen IBM undercut a Windows box, and while I would warmly welcome such a move, I think it is unwise to expect it. (Particularly after IBMers read this story and do their own competitive analysis.) Having said that, go ahead IBM–make my day. Prove me wrong. Do it at $10,000.

And do it now rather than waiting until there are quad-core Intel Xeon and Advanced Micro Devices Opteron processors in the market in 2007. Because at that point, they are going to lower the boom on the Power5+ platform in terms of performance per socket.

One final thought on the Work Stream rumor. While I am very happy to hear that IBM is thinking about being very competitive, this is one box. Not a product line. Just like the Green Streak discounts on iSeries Model 270 and Model 820 servers were insufficient, so is a low-cost, single i5 Work Stream server. IBM needs to rethink the pricing of the entire i5 line and get it competitive. The very high-end i5 595 server is pretty good, but as I have shown in the past few months in the “Bang for the Buck” series of articles, IBM has some work to do to make the entire product line competitive with the rest of the server business. Selling customers very inexpensive entry i5 boxes and then asking them to upgrade to much more expensive boxes further down the road is not going to be an attractive option for a lot of new customers. It may cause them to back out of deals, in fact. None of us can afford for that to happen.

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