Fun With IBM i Software Pricing

November 7, 2011 Timothy Prickett Morgan

Last week, as I was building the Power 7 motor comparison monster table to see how the pricing on the new Power7 Gen 2 machines, announced on October 12, stacked up to the prior Gen 1 machines, I kept thinking about the sticker shock that comes with that IBM i 7.1 license fee. No matter how you try to massage it or rationalize it, IBM i represents somewhere between 65 percent to 85 percent of the cost of a base configuration of activated processors and systems software running on it. Even when you add in memory, storage, and other peripherals to the system, IBM i still accounts for the largest item in the machine.

And like hardware, you have to pay it all up front–in stark contrast to so many services we use today.

To try to get a sense of the relative costs of the IBM i 7.1 on the Power7 iron, I consolidated some of the information that went into the bang for the buck table from last week’s price/performance analysis and then played around with the data a bit.

Take a gander at this week’s monster table and then we will talk about it. That is every possible Power7 motor that IBM sells today with all the cores activated and IBM i 6.1 or 7.1 installed on those cores. In the $/CPW All Out column it is just a matter of simple math: how much does the software cost divided by how much oomph, as measured by the Commercial Performance Workload (CPW) rating the processor configuration has. This assumes that you are running the machine full out, with 100 percent of CPW doing useful work.

The bad news is that good news is that the cost of the IBM i operating system scales up faster than the aggregate CPW performance of the underlying system. Like try by a factor of more than 25. The smallest four-core Power 710 has 23,800 CPWs and a 64-core Power 795 (which is one fourth of the top-end machine) has 399,200 CPWs, which is the full extent of scalability for a single image of IBM i 7.1. That is a factor of 18.9 increase in performance from the smallest to the largest IBM i machine. But a license of IBM i with 10 users per core on the PS700 blade will run you $17,890, while that quarter Power 795 will require $3.39 million. That’s a factor of 16 increase in CPWs across the line against a factor of 425 increase in software costs on that iron.

If you do the math, the cheap machines are the four-core variants of the Power 710, Power 720, and PS700 blades, which all spin at 3 GHz. You pay 34 cents per CPW on the two rack machines and 85 cents per CPW on the PS700 blade. (The blade is more expensive because it does not include users with its license, while the rack machines do.) Once you move off these three machines, the blades cost around $3 per CPW and the Power 710 and Power 720 rackers somewhere between $1.50 to $2.00 per CPW. But then you jump up a software tier, and you are very quickly in the range of $6 to $7 per CPW on the Power 730 and Power 740, and before you know it, you’re talking well over $10 per CPW for the larger machines. The price per CPW for IBM i starts to drift down again below $10 per CPW on the larger Power 780 and 795 engines. (Remember these are at list prices, not whatever discounts IBM gives. And I have a hard time IBM doesn’t give rebates for other services as well as discounts on the hardware instead of cutting the price on that IBM i software.)

An interesting observation: On the Power 770 and Power 780 machines running in Turbo Core mode, where you shut off half the cores and run the machines at higher clock speeds, you can cut your effective IBM i 7.1 licensing costs by roughly 20 percent just because you are getting each core to do more work. I have said it a million times, I think. Always get the fastest cores you can afford if you are running IBM i on them. The software licensing costs will be less punishing that way, and it stands to reason that your database workloads (particularly batch jobs) want this, too.

Still, this full-out, pedal-to-the-metal scenario is not how these machines are run in real-world situations. A Power 710 is simply not run anywhere near its peak CPU capacity, any more than your desktop or laptop is at work no matter how much goofing off you are doing. And a Power 795 is probably always running at or near its peak CPU capacity.

So just for fun, I made some assumptions about what typical CPU capacity might be on these different machines and ran the numbers again. I assumed that the PS7XX blade servers and the Power 710, 720, and 730 rackers were running at 40 percent of capacity; the Power 740 and 750 rackers at 50 percent; the Power 770 and 780 at 75 percent; and the Power 795 at 95 percent. Now look at how the math changes.

Lo and behold! When you look at it this way, either those cheap machines are not as cheap as you think, or those big machines are not as expensive as you think. (You decide if the glass of water is half empty or half full.) If you drop the CPU utilization down to 15 or 20 percent on the smaller Power Systems machines, they are every bit as pricey in terms of cost per effective, useful CPW. And suddenly the bigger boxes, even without discounts, are considerably cheaper in terms of effective bang for the buck for the IBM i 7.1 software.

Just for fun, I took an old rule of thumb for IBM mainframe software and applied it to the IBM i 7.1 pricing for these Power7 motors. When I was a cub reporter back in the dawn of time more than two decades ago, IBM’s monthly rental prices for its mainframes had a simple rule of thumb: the monthly rental fee was roughly the basic one-time charge perpetual license divided by 36, which was a three-year term. So I took the IBM i 7.1 license and divided it by 36. And that number was meaningless. So I did something else. I took that three-year term and divided it by 365, to get a cost per day. This brings it down to a human scale.

So, if you have an entry Power 710 or 720 machine, you are paying $7.29 per day to use IBM i 7.1 for running 23,800 CPWs of capacity, or maybe something more like 9,520 CPWs at what I consider typical average usage of 40 percent in this thought experiment. I live in New York City, and you can blow more than that for a sandwich and a drink in a cheap neighborhood. Which is why we brown bag it, by the way, at Chez Prickett Morgan. It is stupid to pay that much for lunch, and I get a kick out of making lunches for the wife and the kids each morning as I am rousting them from bed. On the regular entry Power 710 and 720 machines and the fatter blades, you’re talking about anywhere from $60 to a few hundred bucks per day to have IBM i. And on the largest machines, it’s a few grand per day.

Those daily rates are not adjusted for performance, obviously. But it is an interesting way to think about what it really costs just to have a license of the software.