IBM i Subscription Pricing Comes To All Power9 And Power10 Iron

February 20, 2023 Timothy Prickett Morgan

Big Blue has been gradually “cloudifying” the packaging and pricing of its Power Systems hardware and IBM i software stack as an alternative to buying hardware outright and acquiring perpetual licenses to the operating system and pay Software Maintenance. Subscription-based pricing came to hardware and software for the Power10-based Power S1014 server running IBM i 7.5 last year, and now IBM i subscription pricing is more widely available.

As outlined in announcement letter 223-030 on Valentine’s Day last week, IBM i subscription pricing is now available on all Power9 and Power10 servers, top to bottom, and on the four current IBM i releases. Namely, IBM i 7.2, IBM i 7.3, IBM i 7.4, and IBM i 7.5. And now, you can decide if you want your IBM i platform investments to be on the capital expense budget or on the operating expense budget without having to resort to moving your applications to a cloud. Now, you can make a cloud of your own not just in technical terms with virtual machines and automation, but in economic terms with subscription pricing. The new IBM i subscriptions for Power9 and Power10 machines will be available on March 14, and IBM is intentionally giving customers and partners time to sort it out before it becomes available in the market.

Just as a reminder, here are what machines in the Power9 and Power10 generations are in specific IBM i software tiers:

P05 tier: Power S1014 (9105-41B four core), Power S914 (9009-41G four core), and Power S922 (9009-22G)
P10 tier: Power S1014 (9105-41B eight core), Power S1022 (9105-22A), Power S1022s (9105-22B) 8-core and 16-core processors, Power S914 (9009-41G) 6-core and 8-core processors, Power S922 (9009-22G)
P20 tier: Power S1024 (9105-42A) 12-core and 24-core processors, Power S924 (9009-42G)
P30 tier: Power E1080 (9080-HEX), Power E980 (9080-M9S), Power S1024 (9105-42A) 32-core and 48-core

IBM i subscription pricing is not available on Power8, Power7+, and Power7 iron and will very likely never be made available.

The IBM i subscriptions are available in contract terms of one, two, three, four, or five years. In the following tables, the prices shown are for terms that run for more than one year. The charges are based on an annual schedule and are due annually, not monthly. (It would be interesting to see these shift to a monthly cost, to look more like the pricing from the big clouds, but apparently the customers that IBM has talked to want annual subscriptions, not monthly ones.) Customers who choose to only do a one-year contract have to add a 15 percent premium over the prices shown in the following tables. (The pricing information was not actually available in the announcement letter, but we have obtained them from IBM on your behalf.)

In the comparisons below, there is a big difference between how the P05 and P10 tiers are packaged and priced and how the P20, P30, and P50 tiers are packaged and priced. This is not a new thing. It has been this way for a long time, and the differences persist even as you move from perpetual licensing plus SWMA to subscription pricing, which covers the software license and SWMA all together on an annual subscription basis. The P05 and P10 tiers have per user charges and unlimited 5250 Enterprise Enablement greenscreen processing and the P20, P30, and P50 tiers have unlimited users but have tiered pricing for 5250 EE processing. As we go to press we did not have the official partial and full 5250 EE processing charges on the subscription pricing models, so we took a stab at estimating it relative to the list price for perpetually licensing it.

For the P05 and P10 machines, we did pricing for 25 users and 75 users, respectively, as well as the cost of pushing the licensing up to unlimited users. For the P20, P30, and P50 pricing, we did partial 5250 EE activation and full 5250 EE activation. This modeling is a bit more sophisticated than what we put together back in June 2022 when subscription pricing for IBM i was first made available on the four-core Power S1014 server.

Back in the day – meaning the 1990s – when there was a resurgence of user-based and subscription-based pricing on systems, the crossover point where it made more sense to use a perpetual license with an annual tech support and patch subscription was about 36 months on IBM platforms. The crossover point for the subscriptions is now four years for the entry and midrange machines and about halfway into year five for the larger machines. This is a much more generous – meaning lower – annual subscription price. Back in the day, these subscription charges were billed monthly, not annually, and a lot of IBM System z shops to this day still pay for their operating systems and systems software on a monthly schedule. The current subscriptions are, as we said above, annual. There is not volume discount for signing a longer contract; it is just a commitment by the customer to pay and by IBM to provide support for that particular release that is subscribed to.

As you look at the pricing tables for perpetual versus subscription licensing for IBM i, here is something to consider, and probably the reason the crossover point is where it is around four years. At that point, the difference in pricing at four years is nil, and that is absolutely intentional. That is about the length of time a release at an active IBM i shop stays in production. After that point, if you stay on a particular release, then it gets more expensive relative to the perpetual license to stay. This is a kind of encouragement for you to keep current on your releases, to resubscribe to a more modern IBM i release.

But here is the neat bit. As Moore’s Law progresses, you can probably downshift an IBM i software tier – say from P30 to P20 or P10 down to P05 – along the way, and because you don’t have sunk perpetual license costs, you might be more inclined to keep both hardware and software current and perhaps every other upgrade cycle, or about every eight years, you will be able to do the software tier downshift and still have more performance. Now, you are not trapped into doing a hardware “upgrades” within a Power Systems model family – Power 650 to Power 750 to Power E850 to Power E950 to Power E1050, for example – and sticking in the same IBM i software tier. You can go from Power E950 to Power S1024 to Power S1114 or something like that.

Just as a reminder, we went over all of the perpetual license pricing for IBM i in detail last June and am not going to do that all over again now.

With that, let’s go through each of the tiers, and look at the typical versus unlimited user costs on the P05 and P10 tiers and the partial and full 5250 EE costs on the P20, P30, and P50 tiers. Note: Way back when, the P30, P40, and P50 tiers were all distinct, but quite a number of years ago IBM collapsed everything down to a P30 tier and P50 tier that are the same for IBM i itself but are not the same for some other important systems software and are very likely not the same for third party software. Second note: These are per core, not per system, prices. A Power10 core does around 4X the work of a Power8 core and around 8X that of a Power7 core, so if you can upgrade your systems and radically reduce your core count, you can potentially lower your IBM i costs.

Here is the updated P05 pricing:

We are analyzing the seven-year cost of the IBM i licenses because that is the time that standard support is in the field. At the top end, five-year term of a single IBM i subscription contract, as you can see, the premium that Big Blue is charging for subscriptions over perpetual licenses plus SWMA is a nominal 12.1 percent on a P05 system with 25 users. If you go for unlimited users, the premium is 18 percent. If you stay on that subscription for the full seven years, then the premium for 25 users is 30.2 percent and the premium for unlimited users is 48.5 percent.

You can’t do anything about that because the delta keeps rising because a perpetual license doesn’t cost more. But In year eight, SWMA costs will double as an IBM i release goes into extended support and the gap between the two will close a bit.

This pattern is repeated across the tiers, obviously.

Here is the pricing for the P10 tier:

The subscription pricing crossover point is pushed out a little bit in time here for both the 75 user and the unlimited user scenarios, and this is just a reflection of the fact that customers buying larger systems get the better deal. But the cost per core for the IBM i stack, averaged out over the seven years, is about twice that on the P05 system.

You will not that the average cost per year for a core of IBM i more than triples moving from the P05 tier to the P10 tier. IBM is artificially lowering the cost of the P05 tier, as you well know.

Moving up to the P20 tier, the average price per year for either a subscription or a perpetual license plus support rises by about 50 percent:

The cost of full 5250 EE processing capacity for greenscreen applications is a dominating factor in licensing for the P20, P30, and P50 tiers, as you can see. Which is why we have the Partial 5250 option in here as well.

And finally, here are the prices for the P30 and P50 tiers, which as we said are the same for IBM i:

Now, you can start thinking about how you want to attack Power10 – or Power9 if you decide to stay one generation back as you modernize your hardware. Have fun!

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