IBM Tweaks Flex Prices, Offers Flex Services

June 25, 2012 Timothy Prickett Morgan

It looks like customers doing some tire kicking on IBM‘s new PureSystems modular systems have been complaining a little about some of the pricing on the boxes and are looking for a little help to get the new iron and its systems and cloud management software up and running. Big Blue last week tweaked some pricing on the Flex System iron underneath the PureSystems configurations, and tweaked some pricing on BladeCenter and Power Systems machines while also rolling out implementation services for Flex System machinery.

First, let’s go over the price changes. In announcement letter 312-070, you will see that IBM has cut the price of the Flex System chassis, a 10U box that holds up to 14 half-width compute or storage elements in the front and a variety of power supplies and switches in the back. The original list price at the April launch for the chassis was $5,589, but as of June 14, it was cut by 33 percent to $3,738.

IBM had not published the price of the chassis yet, so now we know it is lower than what IBM had originally intended. What is still not clear is whether the chassis price includes the two 2,500-watt power modules, either before or after the price cut. What I can tell you is that a BladeCenter-H chassis, which has two 2,980-watt supplies and which holds 14 skinny vertical blades in its 10U chassis has a list price of $5,079 with two supplies installed, so I suspect two things. First, IBM could be yanking out the power supplies from the Flex System chassis and making them a separately priced option, getting the Flex box empty price in line with the empty price for a BladeCenter-H chassis. Or second, IBM could be making a Flex System chassis with power supplies included less costly to acquire than a BladeCenter-H with power supplies. If IBM explains this, I’ll let you know in a bootnote.

In the same announcement letter, IBM also raised the price of a special feature on the PureSystem 42U rack that allows multiple racks to be bolted together from $180 to $300. This doesn’t seem like a big deal.

The following price change could be a big deal: I didn’t know this, but IBM offers something called a Service Provider Infrastructure Payment Feature for its Power Systems and BladeCenter iron (feature code EUC6 on each system model number). As IBM explains it here, this special feature is an agreement that lets a service provider under a “revenue payment” contract with IBM to pay Big Blue “a percentage of revenue generated on their infrastructure used to deliver cloud services.” Under this deal, “the contract stipulates that each quarter the service provider calculates the amount due IBM and then purchases a quantity of features that satisfies the required payment. Each occurrence of this feature represents one billing unit.” For any given machine, IBM sets a limit, usually a few hundred machines so a service provider doesn’t get too much financial rope with which to hang itself as well as IBM’s Systems and Technology Group.

Anyway, for BladeCenter H blades, Power 740, and Power 750 machines, the price to initiate this special service provider revenue-based pricing for the iron is now $500, one-tenth the $5,000 fee IBM was charging previously. It looks like one more barrier to the cloud adoption for Power Systems has fallen. Presumably the PureSystem p240 and p260 server nodes that are also part of the Power Systems line have similarly attractive pricing on the revenue-share feature codes.

I would love to know what the revenue sharing agreements are between IBM and service providers. And I find myself wondering why end user companies building private clouds and billing their company’s various end users and departments utility-style shouldn’t also be able to get such special billing. I mean, they are an internal service provider, right? As long as they are doing real chargeback, not the common showback that some IT shops are doing so they don’t freak users out, I fail to see the difference.

IBM Global Services is, in announcement letter 612-020, finally getting into the Flex System racket with planning, implementation, configuration, testing, and training services for prospective and new PureSystem customers who need to get up to speed or get help moving to the new Flex System iron.

One set of services is focused on the basic Flex System chassis, its Flex System Manager software stack, which includes a mashup of a lot of different IBM tools, and the server nodes and network switches. Another set of services is focused on setting up VMware‘s ESXi hypervisor on x86-based nodes as well as the vCenter management console for ESXi and hooking it into Flex System Manager to provision hypervisors and virtual machines. There is not yet a companion service for customers opting for Power-based nodes and the PowerVM hypervisor and Virtual I/O Server for virtualizing iron and setting up logical partitions, but there no doubt will be soon. IBM is also offering services to help customers deploy its SmartCloud Entry (SCE) cloud fabric on Flex Systems iron, which is the same cloud fabric that the company uses on its SmartCloud public cloud. It is not clear if SmartCloud Entry can run on either X86 or Power nodes, but I suspect that it only runs on X86 machinery and you need to upgrade to an enterprise version to get Power support. But, IBM doesn’t specify this stuff–as it should–in its announcement letters. So we are left guessing until IBM clears it up.

Global Services is allergic to printing list prices. Someday, this may change. But I doubt it. It’s anyone’s guess what these implementation services cost.