Having Second Thoughts About New Power Systems Iron?

May 4, 2020 Timothy Prickett Morgan

Back in the day, when midrange computers cost somewhat more than they do today (without adjusting for inflation, mind you) and the amount of processing, memory, storage, and networking capacity of the boxes was absolutely miniscule compared to what we can buy today (but sufficient to the task), customers looking to add more AS/400 or iSeries capacity to their datacenter didn’t have to shop around a current N generation or N-1 generation machine, but they could also look into the secondhand market for used N-1, N-2, and even N-3 generation machines and try to buy capacity on the cheap.

It has been a long time since there was a vibrant used Power-based server market, but there are still used machines and components that can be found here and there. IBM, of course, essentially sets the price on used equipment by the price/performance levels that it sets with any new generation of gear. While cash outlay can often be lower for a secondhand machine, the price/performance can be a lot worse, too. And in general, components tend to be less fast and capacious om the older machines, which is one of the reasons why that bang for the buck ratio is not as low as on used iron. But sometimes, you need just this much compute and storage and you have only that much money, and a secondhand machine fits the bill. Or, at least it is a bill you can pay.

To that end, we poke around the IBM site every so often to see what Global Financing, the part of Big Blue that takes old gear in trade and then resells it, is charging for used gear. Sometimes, the deals are just outright silly, as happened back in 2015 when IBM was selling Power 520 machines running i5/OS V5R4 at very ridiculous prices in some cases. The last time we took a peek, IBM was selling Power 720+ and Power 740+ machines using the Power7+ processor from 2013 at more reasonable prices.

Interestingly, IBM Global Financing is still selling vintage Power7+ machinery, and when I looked two weeks ago it was all AIX machinery and when I looked last week (on Friday as I write this), there was one IBM i machine. (We suspect that IBM has more than eight of the used Power Systems machines for sale worldwide. This was just a representative set.) Of course, you can buy a used Power Systems machine and run either operating system, or Linux, or all three on logical partitions, but getting access to the media could be an issue.

Specifically: There is a Power 720+ machine (8202-E4D) with one of its cores having IBM i 7.2 on it with an unlimited number of users for $16,750. Three of the 3.6 GHz cores on the machine are activated, and it has 256 GB of memory, and eight 283 GB disks, with two groups of four drives providing mirrored capacity of 1.12 TB. The system also has a 3 TB LTO 5 internal drive for backup and a four port 1 Gb/sec Ethernet adapter.

Because this market is so thin and very few companies publish their prices anymore, it is hard to say if this is a good price. Ditto for the complete list of eight machines that Global Financing:

There are a wide variety of Power processor cards, memory features, and various networking and storage peripherals that IBM is peddling secondhand, and if you are on the market for this kind of gear, it bears going back to look. In addition to Power Systems iron, you can see there are also IBM Storage arrays that are available secondhand, which you can see here. There were around three dozen Power Systems servers and processing and memory features, and then around 300 related Power Systems peripherals in the Global Financing used equipment catalog, worth several million dollars it looks like at current prices and probably an order of magnitude that at original IBM list price. (I tried to add all of these items to my cart at the same time and crashed the IBM online store:

Some general observations. First, if you only need a few thousand CPWs of performance, such old Power7+ and Power8 machinery could be a way to lower costs. But for any given amount of CPW, it will take roughly twice as many Power7 cores as Power8 cores and four times as many Power7 cores as Power9 cores. The good news is that if you are on very old IBM i 6.X releases and using Power6 or Power6+ iron, moving to Power7 or Power7+ chips will roughly double your performance per core and get you on a supported IBM i 7.X release. There is also probably abundant enough Power7 and Power7+ iron out there that you could buy redundant systems and spare parts pretty easily, especially as customers are dumping this vintage iron and moving up to Power8 iron. With Power9 deals slowing down a bit, as we are hearing from dealers here in the first quarter, there will be fewer Power8 takeouts and less Power8 iron on the market, and we think there will be more Power7 and Power7+ customers seeking used Power8 machines if they don’t want to spend the premium for new gear. That could mean the tightening up of used Power8 prices as more demand chases limited supply, and the prices for Power7 and Power7+ iron will drop as more supply comes to market. That should mean the pricing gap between Power7 and Power7+ iron and Power8 iron – but there is always that IBM i license price to contend with. If IBM i was priced based on CPWs, the Power Systems market, as it relates to IBM i at least, would be a lot more fluid and fungible.

The software pricing always screws things up and makes the hardware pricing do unnatural acts.

The fact is, some customers will have to stay back on Power7 or Power7+ iron because they have to stay back on older IBM i releases because they can’t upgrade their third party applications for either technical or economic reasons. Many shops have gone off maintenance for both IBM i and its stack as well as their applications, and they are not able to pay the after license charges to get current on maintenance and then upgrade to new releases of systems and application software. This is a real problem, and it will keep that secondhand market for Power7 and Power7+ iron around for a longer than we might even think probable, much less possible.

It’s a funny old world.

We wish there were more options available to customers, and not the least of which because it was fun to do a quarterly casing of the used equipment markets in both the United States and Europe when we did this in prior decades, plotting out the acquisition and takeout prices for all kinds of systems and peripherals as we used to do. Sometimes, I thought The Four Hundred brought some order to a rambunctious AS/400 and iSeries market, reckoning new against used and showing when things really didn’t make a lot of sense. I am not about to tell kids to get off my lawn, or that the grass was greener two or three decades ago. But I did enjoy doing all the math to help customers buy the right systems. And the lack of information – and these IBM prices are not really information as I know it, but rather sparse data – is really jarring. Midland Information Systems seems to have a barn full of new and used stuff, but it doesn’t publish prices as it used to, and that is just not as fun, either. Comdisco in the U.S. and Germany, and El Camino and Computer Merchants in the U.S., and Europe Computer Systemes in France, which used to help me compile my prices, are all gone. I miss all of the spreadsheet work and knowing if I built the right kind of sheet and compiled this data and called the dealers on prices that were out of whack, I could not only publish a decent price guide, but help make the market more logical.

Relatively cheap iron ruined all the fun. But that is probably for the best in most cases. As it is, if you need used gear, you have to do a lot of legwork because we can’t even be sure vendors would offer up their best guesses of pricing across a wide variety of secondhand gear to even start up a true Power Systems secondhand market again. At a certain level of thinness, it’s not really a market at all because it doesn’t have enough buyers and sellers of a piece of gear to create a realistic level of pricing.

Hell, we can’t even be sure what a new piece of equipment is worth for lack of published list pricing on Power Systems machines. That’s not good, and X86 machines are only marginally better, to tell you the truth. Hewlett Packard Enterprise and Dell still offer pricing on their entry one-socket and two-socket systems, but forgetaboutit when it comes to anything in the midrange and heavier. You have to talk to someone higher up in the HPE and Dell organizations and be a qualified opportunity, just like you have to be to get any Power Systems pricing on all but the smallest entry machines from IBM.

It is a shame, really. An orderly market would behave better. For all of us. And think of the massive spreadsheets and all of the bang for the buck comparisons. . . . The mind reels.

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