IBM Clarifies Where It’s Going with IBM i Subscriptions, Product Realignment
September 11, 2024 Alex Woodie
As an avid IT Jungle reader, you’re probably aware that IBM is moving its IBM i software stack from a traditional licensing scheme to one based on subscriptions. The company is in the middle of the move at the moment, and it’s also in the middle of a product realignment, which has been the source of some confusion. IBM hosted a webinar recently that helped to clarify where it’s at now with the shift to subscriptions and the product realignment, and where it’s going in the future.
IBM first announced back in May 2022 that it was shifting to subscription-based pricing, starting with four-core SP914 Power9 server running IBM i 7.5 at the P05 tier and then adding the four-core S1014. In early 2023, IBM expanded subscription-based pricing for the remaining tiers (P10, P20, P30) for all Power9 and Power10 servers. By the Fall 2023 Technology Refresh cycle, IBM let everyone know that all new P05 and P10 purchases would be available only with software subscriptions in March 2024 (which it ended up pushing out to May).
IBM’s goal with this shift is to align its licensing scheme with the rest of the IT industry. With the advent of cloud computing and software as a service (SaaS), many customers have grown accustomed to buying subscriptions to enterprise software for a particular number of months or years. Many companies (or their CFOs anyway) want to pay for enterprising computing out of the operating expense (Opex) column as opposed to the capital expense (Capex) column, and now IBM is following that trend, too.
Graphic courtesy IBM
In addition to moving the IBM i operating system to subscription-term pricing (in addition to utility pricing when running IBM i in IBM’s Power VS cloud), the company is also moving to sell the large family of licensed program products, or LPPs, through subscription-term pricing too. It started with Merlin as the first subscription-based LPP in February of 2023, followed by Rational Developer for i (RDi) and Rational Developer for Power Systems (RDS) that May.
At the same time, IBM has been rejiggering and rationalizing how it bundles these LPPs to increase cohesiveness and decrease confusion. It’s also including many LPPs with the IBM i OS proper now. This has caused some confusion in the market, which the IBM i product managers addressed during a recent IBM i Guided Tour webinar.
“So we have been on this journey to shift to license by subscription. We have plans for our entire portfolio at some point in time to be by subscription,” IBM i Principal Product Manager Douglass Gibbs said during the webinar. “What we’ve been focusing on is a smooth transition, trying to make sure there’s lots of notification well in advance of what we’ve been doing. We’re going through the entire portfolio and making changes.”
While IBM is moving IBM i to become a subscription-only product (as well as utility pricing in the cloud), we are not there yet, and customers can still purchase perpetual licenses, even for P05 and P10 on-prem machines, Gibbs said.
“We’re all familiar with the traditional non-expiring license, sometimes also referred to as a one-time charge, formerly referred to also as perpetual,” Gibbs said. “This is the traditional license that most people are familiar with. This license is still available and is used on the P20 and P30 platform with existing or new hardware purchases. On the P05 and P10 platform, you can still acquire a non-expiring license if you have existing hardware that previously has or had a non-expiring license to it.”
Graphic courtesy IBM
Unlike perpetual licenses, subscriptions comes with an expiration date. IBM is offering terms of one, two, three, four, and five years, in addition to 90-day terms for some LPPs, like BRMS and IBM Cloud Storage Solutions (ICC). IBM is encouraging customers to purchase longer subscription terms for the core operating system, Gibbs said.
“The one-year license does have a premium to it,” he says. “Typically, we try to encourage customers to look at anywhere from a three- to five-year license term.”
Later this year, IBM plans to announce when it will shift the P20 and P30 tiers to subscription-only for new machine purchases. The current thinking is that it will be the third-quarter of 2025, according to Gibbs’ presentation.
IBM also has yet to roll out subscription-only offerings for some LPPs, including PowerHA and Db2 Mirror. “So those will be happening in the near future,” he said. “And we’ll started off with just purely subscription being available.”
The plan also calls for enabling customers to pay for their subscriptions on a monthly, quarterly, or annual basis via Technology Lifecycle Services (TLS). The TLS offerings for Power started in June 2024, while the TLS offerings for the IBM i subscription is slated for the fourth quarter of 2024.
Linda Hersch, another IBM product manager, provided some clarity into the work IBM is doing to rationalize its LPPs.
“Our objective is to simplify the portfolio,” Hersch said during the webinar. “We didn’t want to create subscription offerings for all of this stuff, and it just makes great sense in our portfolio to have these items that are automatically included with the IBM i operating system instead.”
Graphic courtesy IBM
Prior to May 2022, IBM separately charged for many LPPs, including InfoPrint Server (5722-IP1), Advanced DBCS Printer Support (5761-AP1), Advanced Job Scheduler (5770-JS1), Performance Tools (5770-PT1), Query for i (5770-QU1), Db2 Symmetric Multiprocessing (Opt 26), etc. Following the October 2023 round of simplification, all of these are included with the IBM i operating system.
The only IBM i products that will remain separate are:
- BRMS (5770-BR1 and the new subscription offering, 5770-BR2)
- RDS (5770-WDS)
- PowerHA SystemMirror for i (5770-HAS)
- Cloud Storage Solutions (5733-ICC)
- Db2 Mirror (5770-DBM)
- RDi (5733-RDW)
- ARCAD Observer for IBM i (5733-AO1)
- ARCAD RPG Converter for IBM i (5733-AC1)
- IBM i Merlin
- Db2 Data Mirroring (Opt 47 – delivered with Db2 Mirror)
For about a year, Hersch said, IBM required IBM i customers to formally order LPPs that it was including with the base OS using the old process for ordering separately priced LPPs, and then it didn’t charge them. That period is now over, and there’s no longer a need to order these LPPs even if you’re not paying for them, because they’re fully included with the operating system entitlement, Hersch said.
“That causes confusion at times because people are like, where did this product go?” she said. “They’re still looking for how to order Performance Tools, for example, but you don’t order it. Everybody just gets it. And it’s in the download packages for IBM i.”
IBM has also rolled out conversion offerings that allow users to convert non-expiring licenses for IBM i to subscription terms. Gibbs discussed how customers with a P05 box with a current IBM i license and an entitlement for an unlimited number of users, with up-to-date SWMA , which costs nearly $24,000, can convert to a three-, four-, or five-year subscription for an unlimited number of users and pay $1,600. For the equivalent situation on a P10 machine, the cost would be $2,000.
Gibbs said it’s important to do the math on whether these conversions make sense, noting that IBM set the break-even price for unlimited users at about the 75-user mark. “You’re going to be probably looking at doing a conversion if you have unlimited users,” Gibbs said. “If you don’t have unlimited users, you’re going to be looking at a subscription.”
There are a lot of details to consider. IBM encourages users to read the IBM i Subscription Transformation FAQ to find answers to their questions. The FAQ, which is currently 16 pages and was last updated August 29, 2024, contains examples on the conversion question for P05 and P10 machines.
As IBM i shops move to subscription-based pricing, they will inevitably want to see how their on-prem costs will compare to running IBM i in the cloud. Dan Sundt, an IBM i product manager, provided some information during the webinar on Power VS, IBM’s cloud-based offering for IBM i.
“Cloud has always been a kind of a subscription licensing,” Sundt said. “You don’t own anything. You’re paying for the term. You have kind of this Opex payment.”
Sundt noted that IBM is constantly expanding its footprint in the cloud by offering PowerVS in additional data centers. IBM has also worked to make it easier for users to move their data into the cloud, he said.
“We’ve done some things to really help customers get data from on prem to cloud, some compression stuff. If we’re transmitting less data, that helps things be quicker,” he said. “We’ve done some network improvements in Power Virtual Server to help get data from on prem to cloud. We have some QuickStart architectures.”
Earlier this summer, IBM conducted a “pricing alignment” to bring PowerVS inline with the new subscription term licensing, Sundt said. “We actually dropped the price of Power Virtual Server effective July 1st, because we saw that that better aligned with the pricing that people would be paying if on prem,” he said.
You can watch all of the recordings of IBM i Guided Tours here.
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