IBM Deal Prices Current Power8 Compute Like Future Power9

November 6, 2017 Timothy Prickett Morgan

The old proverb, “Ask, and ye shall receive,” is thankfully and just a little bit humorously applicable. In last week’s issue of The Four Hundred, there was a certain amount of weeping and gnashing of teeth about the fact that IBM is not shipping shiny new Power9 machines here in the fourth quarter and will not until early 2018. Given that fact and that the Power8’s are very long in the tooth, we fully expect for Big Blue to cut IBM i customers some kind of deal. There is a small deal for those buying Linux-only versions of the systems, but nothing for IBM i and AIX shops.

On October 27, unbeknownst to us, IBM actually started cooking up a request for price quote (RPQ) special bid deal for these Power Systems customers, and on November 2, this new RPQ deal was announced to Power Systems master resellers and then broadcast downstream to the lower tier resellers further down the food chain. This is how we found out about them, and once again we think IBM should do a real announcement letter and not RPQ special deals, but this gives resellers a little secret inside info to make it look like they are treating customers special, I guess, so in that regard, as long as everyone is happy in the end, this is what matters.

In any event, this RPQ compute discount deal is specifically for the generic models of the scale-out versions of the current Power Systems machines based on Power8 processors, and it does not have a normal announcement letter to customers. You have to know to ask for it. Now you know, which is why you keep us around.

Under this no-charge processor activation RPQ, customers buying single-socket Power S812 and Power S814 machines or two-socket Power S822 and Power S824 machines, which use the PowerVM hypervisor and can support IBM i, AIX, or big endian Linux, can get processor activations for free on the machines. In the letter to downstream resellers, the master resellers are telling customers that with this deal “they buy Power8 now and get, depending on configuration, up to Power9 price/performance.” So that gives us a pretty good idea of what IBM is thinking about its pricing for Power9 machines. But that is a story for another day. (Next week, we hope.)

Our purpose here is to let you know this RPQ deal is out there, and to tell you that it is only going to be valid for machines that are ordered between now and December 31, 2017. Here is the list of RPQs as they apply to the different machines and different processor options for them:

8284 – Zero Priced Processor Activation, 9Q1900
8284 – Zero Priced Processor Activation, 9Q2000
8284 – Zero Priced Processor Activation, 9Q2100
8284 – Zero Priced Processor Activation, 9Q2200
8284 – Zero Priced Processor Activation, 9Q2300
8284 – Zero Priced Processor Activation, 9Q2400
8286 – Zero Priced Processor Activation, 9Q2500
8286 – Zero Priced Processor Activation, 9Q2600
8286 – Zero Priced Processor Activation, 9Q2700
8286 – Zero Priced Processor Activation, 9Q2800
8286 – Zero Priced Processor Activation, 9Q2900
8286 – Zero Priced Processor Activation, 9Q3000

This deal is not combinable with two other deals that are still on the books, one which came out last fall and another one that we did not know about and that only applies to AIX machines for some reason.

The first deal, called the Double Core/Memory RPQ, went into effect on September 14, 2017 and we didn’t catch wind of it until November last year, and as the name suggests, it gave customers who bought a four-core Power S814 or a six-core Power S814 half the core activations for free plus 64 GB of memory at half price. It was not obvious that this deal was still in effect, but what I can tell you for sure is that IBM says that the new free core activation deal cannot be combined with the double up core/memory deal. Unless you push hard. (Wink. As I think you should given that the memory in Power9 systems has a good chance of being cheaper than in Power8 systems, so long as the memory draught gets some rain in early 2018, as we think it will.)

The Deny Oracle RPQ, which you can see here, gives customers buying a Power S824 running Unix plus PowerVM Enterprise Edition a free processor card with a 12-core Power8 card with the cores running at 3.52 GHz and the activations for the cores for free plus 32 GB of main memory for free. This is one hell of a deal, and it should obviously also be available to any IBM i shop that is fighting to keep out Oracle’s databases, even underneath Oracle applications. (Think OneWorld.)

The effect of this new core activation RPQ is substantial, and the resellers cooked up one example to prove the point. If you configure up a Power S822 with two processor cards, each with an eight-core Power8 chip running at 4.1 GHz, and put in 256 GB of main memory, two 300 GB 15K RPM SAS disk drives plus the media backplane, a DVD drive, the media backplane, power supplies, cables, and a four-port 1 Gb/sec Ethernet controller, the system has a list price of $32,819. The 16 core activations on this machine cost $9,792, while the two processor cards only cost $4,826, so those core activations are a big part of the compute, and if you drop these charges, the cost of the overall machine drops by 29.8 percent.

This is the kind of price cut we were talking about two weeks ago as being necessary for customers to buy a Power8 machine now rather than wait for a Power9 next year. Cutting the memory costs in half – it is $13,600 on this particular Power S822 system – would cushion the blow a little more, but memory prices are up by 2X to 4X since this time last year, so that is a big ask and would really hurt IBM’s bottom line in Power Systems right now. Unless it had a lot of DDR4 memory in the barn that it bought before the price hike started and that it can leverage to win deals now without adversely affecting its bottom line.

We are going to try to get pricing for all of the machines affected by this deal and see the effect it has on the list prices. We are also going to look at this Deny Oracle deal and see what help it might bring to customers in the IBM i base if it were extended them. Stay tuned.

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