IBM Hikes Hardware, Software, And Services Prices

November 4, 2024 Timothy Prickett Morgan

Inflation might be somewhat tamed in the major economies of the world, but the price increases keep coming from Big Blue as it tries to balance out its costs and its need to profit to drive the stock that provides the real compensation for top executives against customers who are getting pretty sick of price increases in every aspect of their business and personal lives.

We saw a price increase hit our emails, as did other IBM i shops, on October 29 last week, but if you look at announcement letter AD24-2249, it was dated September 3, 2024. Go figure. IBM likes to give three months of notice on price increases, and this one takes effect on January 1, 2025, so the September letter date makes sense. But like we said, we didn’t get notice of it until October 29.

The good news is that the entry Power10 machines have all been spared a hardware price increase. On the hardware front, the Power E1050 midrange machine and the Power E1080 big bad box both have a 6 percent increase on their base system price. The price increase also applies to the feature 4586 Capacity On Demand (COD) and the feature 5819 Enterprise Storage Pools 2.0 features for these systems. Ditto for the feature 5899 four-port 1 Gb/sec network adapter. As far as we know, there have not been price increases details for all features of these Power E1050 and Power E1080 machines. Which is a good thing, too. It could have been a broader price increase.

Having said that, the Consumer Price Index forecast for 2024, which already had a similar 6 percent to 10 percent price increase on January 1 of this year, is only forecast to rise by 3.1 percent in 2024 and 1.8 percent in 2025. So, IBM’s combined 12 percent increase over two years when inflation is only up just shy of 5 percent seems like profit taking.

The 6 percent price hikes were also broadly applied to Enterprise Storage Server disk arrays, the Fusion hyperconverged storage based on Red Hat software, and the Storage Virtual Controller storage virtualizer, miscellaneous tape drives, virtual tape libraries and flash arrays. The important thing is that the hike involves the Storwize SAN arrays that are commonly attached to midrange IBM i systems because customers have been encouraged to not use internal disk and flash arrays.

In the spreadsheet outlining the prices, IBM also says that storage software and new and renewal Software Maintenance contracts for storage software will also be hit with a 6 percent hike.

Drilling down further into the spreadsheet, we see that a slew of systems software for Power iron is also getting the 6 percent price increase, including new IBM i perpetual licenses (which are still available on midrange and big iron machines) and IBM i subscriptions (which are the only licensable option for new Power9 and Power10 iron). For those who have existing perpetual licenses for IBM i, the Software Maintenance is going up by 10 percent starting January 1. IBM told us last year to expect a 6 percent increase in IBM i software costs and a 10 percent increase for SWMA every year, and Big Blue is making good on that promise.

The slew of IBM i software – Rational Developer Studio for i, PowerHA, Db2 Mirror, BRMS, Cloud Connect, PowerVM, PowerVC, Power SC, VM Recovery Manager, HMC Virtual Appliance for X86, and vHMC for Power – all got the 6 percent bump.

But wait, that’s not all you get.

In announcement letter AD24-2251, which we received on October 30, which was dated for September 3, and which was effective on October 1, IBM announced a separate “Price Action for Power/Storage” as the title put it. In this case, however, the reference to Power/Storage was not what you think, but was for disk and flash storage used in Dell PowerEdge servers and Ceph block storage clusters. Which is weird. This must be some legacy relationship that IBM has in the wake of the red hat acquisition five years ago. Anyway, the price changes range from 5.1 percent to 120.2 percent, depending on the features.

And finally, in announcement letter AD24-2253, Big Blue announced a general pricing harmonization – GPH in the IBM lingo – for its Passport Advantage and Passport Advantage Express software distribution channels. IBM says: “For most products, the following price harmonization changes will apply a 6 percent increase worldwide. For a small number of products, price harmonization adjustments will deviate slightly from the assumptions above. In some cases there will be a higher price increase or a price reduction, but overall most of the price changes will not exceed plus or minus 5 percent.”

There are 31,053 line items in the pricing spreadsheet accompanying this announcement., which includes IBM’s system monitoring and management tools, data analytics platforms, data cleaning and data management tools, development tools, various storage and security software, and message passing middleware. We scanned the list and most of this stuff is not something that IBM i shops have installed. We presume that in places where there is overlap, there is only a 6 percent increase and there is no double whammy.

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