Why Big Blue Is Simplifying The IBM i LPP Stack

October 23, 2023 Timothy Prickett Morgan

If only the paranoid survive, as legendary Intel co-founder Andy Grove once quipped, then we all would pretty much have to be paranoid pretty much all the time. And this, obviously, would not be healthy. But as legendary founder of The Four Hundred, the irreplaceable and irascible Hesh Wiener, once quipped, sometimes they really are out to get you.

And so, we come to IBM’s recent “come to Bezos” moment starting late last year that it was going to be providing subscription pricing for hardware and systems software for the IBM i platform running on Power Systems. We fully expect that IBM will not only move all of its software that is on perpetual licenses and a maintenance plan to move to straight subscriptions, and if it doesn’t outright remove perpetual licenses then it will raise prices on them to make them so unattractive that no one will want them anymore.

That certainly is the case for extended Software Maintenance on IBM i, as Steve Pitcher from Service Express, made abundantly clear in a recent story he wrote here. That service extension is very expensive, and it does not really deliver the kind of experience that IBM i shops are used to but if you are trapped on IBM i 7.3, well, what you gonna do? Those trapped on IBM i 6.1. or 7.1 are in even worse shape, and we think there are a lot more of them than we all care to think about, as we wrote about in March of this year.

Which is why IBM is shifting to a subscription model for all of its software. The subscription pricing for the core operating system reaches a crossover at around four years with the perpetual licenses plus SWMA approach, as we have done the math on earlier this year across the P05, P10, P20, and P30 IBM i software tiers. But what that math doesn’t show is just how many things IBM is making free as it turns them into subscriptions. Not only are they free, but they are being distributed with the core operating system and patched with PTFs and no longer need license keys. We don’t know how much savings for customers are involved here, but it is substantial for those customers who used to buy all the extra Licensed Program Products (LPPs) for the IBM i operating system, less so for those who didn’t.

The point is, after March 2024, you won’t have the option of doing perpetual plus SWMA on new Power9 or Power10 orders from Big Blue. You will be subscription only, like it or not.

The question is: Why?

There are some, like me, who believe Big Blue is simplifying the IBM i stack and moving to subscription pricing so it can more easily sell more systems and more software, which is accomplished by moving from a massive capital expenditure every four, five, six, or seven years and then a depreciation schedule for that IBM i system and moving to a full machine that has a simple monthly price, whether you run it in your datacenter or the IBM Cloud and possibly anyone else’s datacenter for that matter. Prices will converge across suppliers and adjunct services will provide the differentiation.

IBM is switching to subscriptions to sell to more customers and possibly, over the long run, to sell more hardware and software.

IBM likes the predictability of annuity like businesses, as it has had for its mainframes for decades and as it had for a lot of services contracts for many decades, too. Yes, this is going to be more expensive for some customers, but it is not going to be more expensive than a 50 percent increase in IBM i stack perpetual licenses and maybe a 2X increase in Software Maintenance prices. This was the other way IBM could keep investing in the IBM i software platform and the underlying Power Systems hardware.

There are others that we have talked to who think IBM is shifting to subscriptions so it can sell the IBM i business itself, or the Power Systems business lock, stock, and license key.

I don’t think this is the case, but anything is possible and if IBM gets to a place where the Power Systems business cost too much to crank the upgrade cycle one more time, it could try to sell it off as it did low-end printers, high-end printers, PCs, disk drive manufacturing, X86 servers, and chip manufacturing. Inspur or Lenovo or Hitachi might want to buy the Power Systems business, but it would be hard to get US regulatory approval for such a sale. It is not that the Power Systems business is as strategic as it once was to Uncle Sam directly, but that such a sale looks bad given the trade war with China. The day may come when such a thing comes to pass, but we do not think that day is today.

We shall see.

In the meantime, you can read announcement letter AD23-0700 to see how the software keys have been removed for a slew of things and how the new packaging works for the LPPs that are now free.

To sum it up, here are the LPPs included with the IBM i entitlement:

Administration Runtime Expert, also called Application Runtime Expert (5733-ARE)
CICS Transaction Server (5770-DFH)
HTTP Server (5770-DG1)
Facsimile Support for i (5798-FAX)
Developer Kit for Java (5770-JV1)
Managed System Services (5770-MG1)
Network Authentication Enablement (5770-NAE)
System Manager (5770-SM1)
TCP/IP Connectivity Utilities (5770-TC1)
Transform Services (5770-TS1)
Universal Manageability Enablement (5770-UME)

Here are the LPPS that can be ordered at no cost:

Web Enablement: includes selected versions of WebSphere Application Server (5733-WE3, 5722-WE2)
Cryptographic Device Manager (5733-CY3)
OmniFind Text Search Server for DB2 for I (5733-OMF)

And here are the products that still carry separate charges:

BRMS (5770-BR1)
Rational Development Studio (5770-WDS)
PowerHA SystemMirror for i (5770-HAS)
Cloud Storage Solutions (5733-ICC)
Db2 Mirror (5770-DBM)
Rational Developer for i (ordered via Power channel as 5733-RDW or via Passport Advantage)
ARCAD Observer for IBM i (5733-AO1)
ARCAD RPG Converter for IBM i (5733-AC1)
IBM i Modernization Engine for Lifecycle Integration (“Merlin” ordered via Passport Advantage)
IBM i Optional Features: Db2 Data Mirroring (**comes with Db2 Mirror) – Opt 48

We gave you the subscription pricing as we know it on many of these programs a month ago; some have still not been divulged as far as we know.

Oddly enough, DB2 Web Query for i (5733-WQX) was included in this latter list in IBM’s presentations, but as you know, IBM said it was stopping selling it on October 10.

3 thoughts on “Why Big Blue Is Simplifying The IBM i LPP Stack”

John Sherrill says:

October 23, 2023 at 9:47 am

Why do you not mention Content Manager OnDemand 5770-RD1. It is still an active and supported IBM i product?

- Timothy Prickett Morgan says:
  
  October 23, 2023 at 2:44 pm
  
  I mentioned the LPPs that IBM did.
  
James Sparkman says:

December 6, 2023 at 7:23 am

I seem to recall that many many years ago, subscription pricing was the norm for many things and then…….IBM ran out of money (late 80’s?) and getting ready to go broke. Funny how that brought in perpetual licensing. Here we go again but I guess most of the people that survived those years under Big Blue are either retired or in greener pastures or just don’t remember that.

As a BP I’m not sure how we’re going to be paid on subscription pricing as opposed to permanent licensing. I guess this is something to be worked out or I’ve missed the memo. If we can’t make money on that…guess what’s going to happen?

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