IBM Tweaks i5 515 and 525 User-Based Prices

May 21, 2007 Timothy Prickett Morgan

After getting lots of feedback from customers, resellers, and independent software developers who have been reacting to the announcement of the user-priced System i5 515 and 525 Power5+ servers, IBM has made some modifications to the way software is priced on the boxes. The change in pricing gives the i5 515 and 525 servers a better fit into the way certain kinds of customers make use of the box, and it also shows that IBM wants to react fast to any feedback from customers to get the pricing right.

When the i5 515 and 525 servers were launched on April 10, there were a number of configurations of each box, which included a different hardware configuration, various software features, and a set number of initial users on the box. (See IBM Goes After Windows with User-Priced System i Servers for the details on the announcement.) The i5 515 came with five users and topped out at 40 users, while the i5 525 came with 30 users and could have an unlimited number of users attached to it. To add users to a base box, i5 515 users add them in bundles of five and i5 525 users buy them in bundles of 10; each user added to the system above and beyond the initial users in each configuration costs $250 to license.

With the initial launch of the user-priced i5 machines, a user was defined as a person inside the corporate firewall who need to access applications on the System i server as well as any external person who authenticates into the system to run applications. Users coming in from the Internet anonymously to browse a Web page or do some rudimentary informational search do not need an i5/OS user entitlement. To deal with the users coming into the system from outside the firewall, IBM has done exactly what Microsoft has done with its middleware: have a single license fee for an unlimited number of Internet users, since you cannot count external users without a big hassle. This is done though a feature called i5/OS External Access, which costs $3,995 per System i5 515 or 525 server.

With this pricing method, IBM was charging for authenticated users based on the pool of end user accounts that are created on the system. With the change that IBM made last week–and which could be formalized in an announcement this week–Big Blue is moving to a concurrent user pricing scheme instead of counting the total pool of authenticated users. For many companies, this is going to dramatically cut down on the incremental cost of adding users to an i5 515 or 525 system. The change is also going to give these machines another competitive advantage over Windows-based systems, which have Client Access Licenses based on counting all authenticated user accounts on a system, not concurrent users.

According to Ian Jarman, product manager for the System i line, the change was made to take into consideration the large number of manufacturing, distribution, retail, and financial services customers who have a mix of users on the system. Some users are always on the system during business hours, but others are only occasional users of the box. For instance, in manufacturing, companies might have two or three shifts of workers and therefore they do not want to have to buy accounts for all workers, even if they do authenticate onto the box individually. Similarly, in retail operations like mini marts, where there might be a dozen employees at the store authenticating through point of sale systems, but rarely more than a few at a time, the user costs for i5/OS can be excessive. Ditto for local governments and schools, where there tend to be relatively few constant users and a large pool of occasional users on i5/OS boxes.

“We needed to add more flexibility in our pricing to handle this situation,” explains Jarman. “So now we are going to charge for i5/OS based on concurrently authenticated users. We’re adjusting very rapidly and very dynamically.”

Jarman said the switch from total authenticated users to maximum concurrently authenticated users not only matches the ways and times that end users at many companies get access to i5/OS systems, but that it also reflects the way that many software developers charge for the applications that run on the i5/OS and OS/400 platform.

The price for each authenticated user remains the same, and so does the number of end users in a bundle that customers have to buy for each box–five for the i5 515 and 10 for the i5 525. The price for i5/OS External Access for anonymous, Web-based users who come into the system from outside the corporate firewall remains unchanged at $3,995.

There are no governors on the i5 515 and 525 servers to electronically cap the number of users on the system. Whether IBM was counting the total number of authenticated users on the system or the maximum concurrent users on the box, there is no switch inside i5/OS that will stop an unlicensed user from getting into the system if a system administrator has set up an account. If a customer goes over a limit, system administrators will get a message so they know that they are not compliant. Incidentally, the i5 515 and 525 systems do not send IBM messages notifying the bean counters at IBM’s Armonk headquarters or Rochester support operations that a customer is over their limit on i5/OS user licenses.

“We are not trying to catch people out, and we are not going to stop people from working,” says Jarman. “Our intent is to supply the tools to help people plan for the right number of user licenses and help them be compliant with their license.”

He says that the next release of i5/OS will have a better set of tools to help customers manage user accounts, and that IBM has tools today to help companies get the right number of concurrent licenses based on the work habits of their employees. IBM does, by the way, reserve the right to audit a company to make sure that they are compliant with their i5/OS licensing on the new user-priced i5s.

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