IBM Cuts CPU Prices on Power5 and Power5+ Servers

May 5, 2008 Timothy Prickett Morgan

One of the great things about modern servers is their ability to have extra and latent capacity hidden away inside their processor complexes, just waiting to be activated in the event of an emergency spike in application usage or as part of a normal system upgrade to permanently add new software to the box. This capacity on demand approach to building systems has been around since the end of the dot-com boom in the RISC/Unix space, and it has been a great thing for companies with modest workload growth and a desire to avoid system upgrades.

But there is a problem with capacity on demand–at least a problem from the point of view of the system vendors–and that problem is this: If a new server line comes out every two years or so, and I have three, four, or five years of latent capacity growth sitting inside the server I already own, I probably don’t care all that much when a new product line is announced delivering more performance and, hopefully, better bang for the buck. Which means I won’t upgrade the system, which means the server maker can’t make a big sale. But still, IBM wants customers to buy–particularly when there is a lengthy product ramp up, as has been the case with the Power6-based Power Systems machines–and not wait. What is a vendor to do?

Cut prices on processors in the older gear, of course, and sell what can be sold.

To that end, IBM has announced two deals on high-end System p machines that makes the cost of adding processors a lot less expensive, and presumably competitive with the cost of capacity on the Power6 machines. (It is hard to say since pricing is not yet available on the Power 570 and Power 595 boxes, which do not start shipping until May 6.) First, IBM has revived a deal it announced last fall to pump up sales of Power5+ versions of the System p 590 and 595 servers, and as far as I can tell, the deal has not changed one bit from the one that we told you about back in August 2007 that expired in December. (See IBM Cuts p5 590 and 595 Prices by 20 Percent and More for the details on that deal.) The one change, of course, is that this latest discount deal was announced on April 29 and expires on June 20.

Here’s how it works. Customers buy specific p5 590 and 595 server configurations with a certain number of Power5+ cores activated and then IBM throws in the system boards (called books by Big Blue) on which the cores are located for free. The more cores you activate, the more free boards you get. The p5 590 machines scale from two to 32 Power5+ cores, while the p5 595 machines scale from four to 64 cores. Each book in these machines has eight dual-core processors, for a total of 16 cores, divided evenly across two massive multichip modules that include external L3 cache for the processors as well as four dual-core Power5+ chips. Because these boards cost tens of thousands of dollars, in any given configuration of the many possible ones customers can do under this deal, the effective discount ranges from 15 percent to 30 percent, roughly.

So, how does that relate to capacity on demand, you ask? Well, technically, this deal does not. But there is no way that IBM will be able to give such discounts to customers acquiring new Power5+ System p 590 and 595 servers and not give similar discounts to existing customers who activate cores on machines they already have installed. Not if IBM doesn’t want to seriously annoy its largest customers, anyway.

And hence, on April 15, IBM announced a discount plan for customers with System p 570, 590, and 595 machines that gives these shops a discount on processor activations inside their existing machines by 60 percent. This deal expires on June 25, so you can see that IBM is eager to get some cash for the quarter even if it might mean giving up on some Power6-based server sales in the next few quarters at AIX and Linux shops who use IBM’s Power iron. To take part in this very generous deal, customers have to activate processor cores in pairs and they must have had Capacity Upgrade on Demand features installed before April 15. The processor activations cover 1.65 GHz and 1.9 GHz Power5 cores and 1.9 GHz and 2.2 GHz Power5+ cores in System p 570 servers; 1.65 GHz Power5 and 2.1 GHz Power5+ cores in System p 590 servers; and 1.65 GHz or 1.9 GHz Power5 or 2.1 GHz or 2.3 GHz Power5+ cores in System p 595 servers.

One last thing. While IBM does not explicitly say that this 60 percent discount can be applied to System i 570 and 595 machines, which are based on the same Power5 and Power5+ cores, given the whole Power Systems convergence, it doesn’t make any logical sense that the discounts would not be available to System i shops–and at the same low prices that System p shops pay, too. It is a bit embarrassing, in fact, that this announcement did not span both the System i and System p lines, given all the ink that has been devoted to the Power Systems merger at the high end since July 2007. High end i5/OS customers should demand equal treatment. Plain and simple.

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