Big Blue Makes The Case For IBM i P05 And P10 Subscriptions

September 16, 2024 Timothy Prickett Morgan

We have been chronicling the transformation of the IBM i software stack from perpetual licenses with tech support to the more modern and now more normal subscription pricing that we have for both commercial and consumer software and other services these days.

The last program in the stack to move from perpetual to subscription for the IBM i P05 and P10 software tiers was Backup, Recovery and Media Services for i (5770-BR1), which was sunsetted on August 27 in announcement letter AD24-0665, and on January 1, 2025, you will not be able to order a perpetual license to BRMS for P05 and P10 machines. You will, however, but able to buy a subscription to Backup, Recovery and Media Services for i Subscription Term (5770-BR2). Support for existing BRMS 5570-BR1 licenses will continue to be available, but don’t think you can wait forever to move to a subscription.

“We introduced a new version in January as a subscription only, where we are adding enhancements, including a new user interface and some other things that people have asked for in BRMS,” Steve Sibley, vice president and business line executive for IBM Power, tells The Four Hundred. “That’s where we will be putting all of the new enhancements. Therefore, we’re going to be withdrawing the non-expiring licensed version. And in a couple years – and we’re going to give clients a couple years – we will actually take it out of group SWMA, as far as support goes, so that you will actually have to have the new subscription version if you want new defects addressed or you want the new features and functions that we’re putting in BR2.”

It looks like IBM will do this sometime in 2026, so you have some time to get used to subscriptions.

Rational Developer Studio, which includes the compilers for the IBM i platform, has also recently shifted from perpetual to subscription licenses, and the perpetual licenses – what IBM calls “non-expiring licenses” for the past several years, which no one else does – for RDS are going to be removed.

Aside from making us aware of that, Sibley reached out to us to share IBM’s own analysis of how subscription pricing compares to perpetual licensing – specifically for the P05 and P10 tiers and after a price increase that went into effect for both perpetual and subscription pricing back in January 2024. So this represents the latest-greatest, most current look at how to compare the old way with the new way.

As we have explained in the past, there are two ways to get an IBM i subscription for a P05 or P10 machine. You can buy a new license, or you convert a license from perpetual to subscription through conversion fees.

Here is how IBM compares and contrasts a P05 machine with perpetual and subscription licenses for a single core activated and ten users on the machine:

When this experiment for moving to IBM i subscriptions started more than two years ago, for those elements of the IBM i stack that had moved to subscriptions, the crossover point where the perpetual license plus SWMA price was equal to the subscription price was around four years – and was intentionally set as such.

As IBM has moved forward, simplifying the catalog and reducing the number of chargeable licensed program products as well as moving things like BRMS and RDS to subscriptions, that crossover point has pushed out to five years, give or take. Considering that the warranty on machine components such as memory, disk, and flash are only for five years, this seems fair. (IBM will maintain systems using these components for longer, as long as you pay for hardware maintenance.)

We are well aware that more than a few IBM i customers have their Power Systems machines in the field for five to 10 years, which gives them the illusion of spending a lot less money on their machines. But they are also building up technical debt and putting their systems at risk if they stay too far behind, and we do not generally advise this behavior. It also weakens the IBM i business at Big Blue and in its reseller channel, which has far-reaching side effects over the long haul for those companies who want to see the Power Systems platform last for another decade or more. IBM gives discounts if you pay for the subscriptions ahead of time, by the way, but you are not forced to buy any more than a one-year subscription. (And if you do that, you will pay a slight premium because IBM doesn’t want this.)

Here is how transferring perpetual licenses and transferring and converting to subscriptions for a P05 machine stacks up:

In the example above, the math is being done for a machine with two Power9 or Power10 cores active and an unlimited users. Sibley says that about three-fourths of P05 customers who buy a new machine get new licenses when they get a new Power Systems machine, and only one-quarter of them transfer their licenses from the old machine to the new one. And at five years – and this is the important thing – that means there is no price increase by moving to subscriptions for those customers who bought perpetual licenses and SWMA every five years.

This is not true for those customers who kept their machines longer or did transfers of licenses to a new machine, and Sibley did the math for this corner case of doing a transfer after having bought some fairly pricey unlimited IBM i user licenses under the perpetual plan, as shown above.

This is just plain more expensive, which is another way to say that IBM really wants you to start thinking of your IBM i license as a subscription, just like you do for your data plan and all of your applications on your smartphone. And by the way, the crossover point for unlimited users is just shy of six years, which even more generous than the rest of the stack.

Alright, let’s move on to the IBM i P10 tier. Here is how the comparison looks comparing the base operating system plus BRMS and RDS with one core and 10 users:

The crossover is at a little less than five years, which again is absolutely intentional on IBM’s part. The crossover for unlimited users for the P10 tier is four years, so if you want to push back at Big Blue, have the company shave that $16,000 unlimited user subscription to $12,720 if you want it to be fair.

With the P10 tier, says Sibley, about half of the customers buy new IBM i licenses when they buy new machines and the other half does license transfers, and it is usually because they have spent a lot of dough on LPPs and unlimited user licenses for IBM i. Here is what the math on the P10 license transfer while converting to subscriptions from perpetual licensing looks like:

Here is the last thing you need to consider. Every year, until IBM stop supporting perpetual licenses, the cost of perpetual licenses will go up 6 percent per years and Software Maintenance (SWMA) will go up 10 percent per year. That’s how much IBM wants you to move to subscriptions.

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