IBM Does More Deals to Move Iron

May 26, 2009 Timothy Prickett Morgan

The price cutting and tweaking on hardware by IBM for gear relating to its Power Systems boxes continued last week.

Most importantly, Big Blue cut the prices it charges on selected feature conversions in its Power 595 line, and some of the price cuts were pretty dramatic, obviously intended to make it more likely that customers with these big iron boxes spend a little money rather than waiting for the next budget cycle. Here’s the details on the price changes, complete with the feature conversion descriptions that IBM never gives in its announcement letters:

Machine	From	To		List Price		Price
Type	Feature	Feature	Description	Old	New	Change
9119	7280	5681	256 GB DDR1 to 256 GB DDR2	$194,048	$89,600	-53.8%
9119	7668	4754	2.3 GHz Power5+ to 4.2 GHz Power6	$17,545	$14,295	-18.5%
9119	7668	4755	2.3 GHz Power5+ to 5 GHz GHz Power6	$18,000	$16,750	-6.9%
9119	7669	5680	1 GB DDR1 to 1 GB DDR2	$758	$350	-53.8%
9119	7693	4754	2.1 GHz Power5+ to 4.2 GHz Power6	$16,560	$14,110	-14.8%
9119	7693	4755	2.1 GHz Power5+ to 5 GHz GHz Power6	$24,000	$15,400	-35.8%
9119	7799	5681	256 GB DDR1 to 256 GB DDR2	$83,712	$38,400	-54.1%
9119	7815	4754	p5 595 Turbo book to 4.2 GHz Power6 book	$18,575	$13,675	-26.4%
9119	7815	4755	p5 595 Turbo book to 4.2 GHz Power6 book	$27,775	$15,850	-42.9%
9119	7925	4754	p5 595 book to 4.2 GHz Power6 book	$19,625	$16,800	-14.4%
9119	7925	4755	p5 595 book to 4.2 GHz Power6 book	$28,100	$17,000	-39.5%
9119	7970	5680	Base 1 GB DDR1 to 1 GB DDR2	$327	$150	-54.1%

As you can see from the table above, IBM is trying to get customers with certain Power5+ versions of the 595 boxes and their DDR1 main memory modules to upgrade to 4.2 GHz or 5 GHz Power6 processor books and their companion DDR2 main memory. Customers are apparently balking at the $758 per GB that IBM was charging to convert DDR1 main memory to DDR2 units, and considering how memory prices have come down dramatically for both DDR1 and DDR2 modules on the open market, these 595 shops are not being unreasonable. That IBM was willing to cut prices on processor book and processor core upgrades is a bit more mysterious, but my guess is that big shops have done some price/performance analysis comparing new Power6 gear to upgrade charges and have explained to IBM that it needs to adjust its numbers.

When it comes to Power 595s, I think the customer tail often wags the IBM dog. And that is why I also think that System i 595 customers can–and will–demand the exact same pricing above for their gear as the System p customers doing upgrades are being offered. We’re all one big happy Power Systems family, after all. . . .

IBM has also revived its BladeCenter blade server chassis promotion, which now expires on August 31 and which has a slightly different competitive twist to it. Under this deal, customers who have a blade server chassis from Hewlett-Packard, Dell, or Sun Microsystemscan get a BladeCenter E energy efficient or BladeCenter S small biz chassis for free. IBM has limited this offer to one per physical location (it has to have a unique street address to qualify, which is great news for retailers or banks who want to plunk in blade servers at their various locations), and somewhat oddly is not allowing the standard BladeCenter H or high-end BladeCenter HT chasses to be part of the freebie deal. The BladeCenter S chassis has a $2,599 list price on IBM’s Web store, while the BladeCenter E chassis costs $3,999.

Finally, IBM is offering some pretty hefty discounts on its entry DS3000 series external disk arrays, which can be attached to entry Power 520 and 550 boxes and various Power-based blade servers.

The first bundle consists of a DS3200 with two disk controllers, six 450 GB 15K RPM SAS disks, two HBA controllers, and two SAS cables, which has a list price of $12,557. But under this promotion, IBM is offering the bundle with a 29.2 percent discount at $8.895. (This for an IBM storage business that saw a 20 percent decline in the first quarter, mind you.) The second bundle consists of a DS3300 array with two controllers, eight 750 GB dual-port DATA disks, and a QLogic dual-port iSCSI adapter, which lists for $12.512, but which IBM is selling as a bundle for $9,467. That works out to a 24.3 percent discount. The last bundle is for a dual-controller DS3400 disk array with eight of the same 750 GB SATA disks, two 4 Gb/sec optical transceivers, two fiber optic cables, and an Emulaex 4 Gb/sec Fibre Channel controller. Bought individually, these components have a list price of $15,268, but IBM is hustling them for $10,798 under this promotion, which works out to a 29.3 percent discount.

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