The System iWant, 2007 Edition

The great thing about IBM‘s woes with the AS/400, iSeries, and System i5 products and its line of business within the Server Group, Systems Group, and now the Systems and Technology Group for the past dozen years is that there is always an opportunity to tell Big Blue how it might improve the OS/400 and i5/OS platform. It is always fun to try to figure out how IBM might do a better job of competing first against mainframes, then Unix, then Windows, and now Linux servers.

The bad thing about this situation, of course, is that the OS/400 and i5/OS ecosystem used to be larger. OS/400 systems and servers used to have nearly as many seats tied to them as did IBM mainframes–the largest user base in the world a decade and a half ago, before Unix and Windows got into the data center. Had IBM used defensive and offensive tactics to protect and grow its midrange business into a full product line suitable for entry, midrange, and high-end customers–not just technically, but economically–and to make its software the de facto standard for business–which it certainly is not any more–I would be sitting on a beach somewhere, sipping a cold beer and watching my kids play on the beach. I would be the editor of one of the largest IT newsletters in the world, and I would have a much larger staff of writers following this interesting and competitive market. And I would certainly not be working on a Sunday afternoon after building some monster spreadsheets on a Saturday afternoon because there is no news in the OS/400 world and because I need to figure out some way to help IBM save its, er, cookies.

So, among the many things that you have done wrong, IBM, one of them is always screwing up my weekends. But, truth be told, I would probably have worked anyway, and I would have been spending my time trying to tell Bill Gates how to find his Auxiliary Storage Pool with both hands because Windows was still not ready for the data center. But, alas, it didn’t turn out that way, either.

Without further ado, here is my latest hair-brained scheme to revitalize the System i business. As I said in last week’s issue, IBM cannot wait until 2008 to revamp the product line, and the user-capped System i5 520 Solution Edition that was launched in October points the possible way to get the System i5 business moving again and–equally importantly–differentiate itself from the pack of X64 and RISC server makers out there. I am calling this the System iWant, 2007 Edition, for lack of a better name.

The idea is pretty simple. I took the example of the 20-user i5 520 Solution Edition that was announced two months ago and ran with it, creating an entire user-capped product line that spans from slightly smaller i5 520s and up to larger i5 570s. I completely ignored the i5 595, just to make my life easier, but it can be argued that only a few hundred i5/OS customers in the world need such a box. The i5 520, 550, and 570 are more than enough machine for the vast majority of the OS/400 and i5/OS installed base. I then created one scenario for customers who want to buy a System i5, called the System iWant to Buy, and another one for those who want to pay monthly for it, called the System iWant to Lease. (Click on those product titles to see the salient characteristics of the machines I have designed.)

The pricing and configuration of all of the System iWant machines is based on the initial pricing of the 20-user and 40-user i5 520 Solution Editions, which are shown in blue in the table. To scale the number of users up in the product line, I pushed up the clock speed and number of processors in the i5 520, 550, and 570 chasses. IBM had 3800 CPWs of performance dedicated to 20 users in the i5 520 Solution Edition and 7100 CPWs for the 40 user box, so I split the difference and said that each user should have 180 CPWs of performance.

I then fully fleshed out the System iWant with the appropriate Power5 and Power5+ processors, giving me a range of users that spanned from 13 to 65 on the System iWant 520, from 18 to 128 on the System iWant 550, and from 33 to 421 on the System iWant 570. To get the top-end performance in each of those three types of machines, I added 1.5 GHz and 1.65 GHz Power5+ quad core modules, which IBM says it will not put into the real i5 line because they do not have enough L3 cache memory for i5/OS workloads. (My response to this is: add more cache to the box, boosting it from 36 MB to 72 MB per chip in the multichip module package that the Power5 chips come in. So I doubled the L3 cache on these, which yields the same 18 MB of L3 cache per core as the real Power5 and Power5+ dual core modules have.)

For additional hardware, the System iWant machines come with memory and disk drives that scale, as best as is possible considering the limitations of the frames, with the number of users. I have to round the number of users up and down to get a memory and disk configuration for a base machine, of course. In general, I have configured 1 GB of main memory and a single 35 GB, 15K RPM disk drive for every ten users. All of the cores are activated in each configuration, incidentally. There are not parts using electricity that are waiting in reserve.

The final result is a System iWant product line with 66 different performance points across three different rack-mounted chasses. There is some overlap in the product line for a certain number of users, and I intentionally left this overlap in there. The reason is that you can get a two-core machine with slower processors to support the same number of users as a single-core box clocking a lot higher. For some customers, having that faster core will mean that other workloads–such as batch jobs–run higher. I charged the same, more or less, per user regardless of this distinction, but a real System iWant line could charge less for a number of users supported on older, slower cores than on a fewer number of faster cores. I don’t think the premium should be very high–maybe a few grand per box–so I left it out of my equations since this difference is utterly dwarfed by the cost of the other parts of the System iWant box.

As for user caps, I think that these machines have to have hard-stop caps, not an honor system governor based on the number of users specified in a license. To be specific, I want i5/OS to only allow the maximum number of concurrent users–either unique 5250 sessions or intranet IP addresses–shown in the tables. If you want more, you have to upgrade your hardware. As for Internet-based users, who might come in from outside of the network, there has to be some sensible policy. Perhaps each Internet gateway consumes 10, 25, or 50 users on a system, and you count up the gateways. (I am not, to be honest, sure how to cope with this.) The point is, concurrent users are absolutely tracked by the box, and there are hard, non-hackable limits.

I realize, of course, that 66 different performance points from what amounts to 66 different products is a lot to support. And I know that this makes adding users a bit more difficult than plugging in a PC or terminal, or giving someone a password. Too bad. If you want unlimited users, buy today’s System i5 machines from IBM. (I am not advocating for these machines to be removed from marketing. Oracle sells its databases with perpetual CPU-based pricing, user-based pricing, and perpetual enterprise-wide licensing. This is no different, in concept.) The System iWant boxes would have to be re-engineered with rapid processor hardware upgrades in mind. This is not insurmountable, given that processors in the i5 line are just cards that plug into a backplane anyway. You shut down, swap out one processor and memory complex for another, and reboot. No big deal. And if that is a big deal, you should have a high availability cluster anyway, so you can take one machine down, reconfigure it, and then bring it back up, then reconfigure the other one, and then roll. This is the 21st century–get with it.

Most importantly, the System iWant does not have an i5/OS Standard Edition, an i5/OS Enterprise Edition, or Enterprise Enablement features to activate and pay for. Every core in the box runs i5/OS–all of it. And if you want all of the machine to support 5250 processing, so be it. If you want to run WebSphere and transform your applications or otherwise screen-scrape them, go ahead. If you want to run Java applications written from scratch and never touch RPG again, don’t let me stop you. Every processor runs i5/OS and its integrated DB2/400 database and WebSphere Application Server. It is all bundled in. You have to pay for compilers and other tools separately, just like you have to now, however. If you want to carve out some partitions to run Linux or AIX, go ahead. Then buy those licenses from IBM at the same discounted prices that the System p5 people get.

The System iWant machines are not Solution Editions. You do not have to buy a third-party application new from a vendor to get one of these boxes, but please, if you are shopping for a new ERP, SCM, or CRM suite, please do buy one of these great boxes. If you have your own RPG, COBOL, or Java code, go ahead and run it. If you are crazy about PHP and you want to create a whole Web storefront and back-end system based on PHP, this is a great box to do this on. Knock yourself out, man. Similarly, if you want to do disaster recovery and cluster some machines together, by all means do so. There are no Capacity BackUp Edition or High Availability Edition machine in the System iWant product line. If you need a second machine, you buy a mirror of the one you already have. No fuss, no muss, because the price is right.

Which brings me to pricing on the System iWant machines. The pricing is based on what IBM actually did for the 20-user and 40-user boxes in the user-capped Solution Editions back in October, with a few tweaks. The pricing on the 20-user box is exactly what IBM did, at list price: $13,900 for an i5 520 with 2 GB of main memory and two 35 GB, 15K RPM disk drives. (IBM is putting in four disks at that price, but I am dropping it back to two drives since the 40-user box only comes with four drives.) If you want to add more memory or disks to boost the performance of your workloads, go right ahead. Memory costs $500 per GB and disks costs $1,000 for a 35 GB, 15K RPM unit; a peppy RAID 5 controller costs $1,500 if you want that.

IBM wants $21,000 to activate i5/OS on the second core in the 40-user version of the user-capped Solution Edition, and as I showed a month ago, that $21,000 puts the Solution Edition way out of whack with pricing on Windows boxes, which are core neutral in terms of operation system and database pricing. So are the System iWant boxes. I don’t care what you run on these machines. You have full access to the full complement of i5/OS technologies, including a substantially beefed up DB2 Multisystem clustering capability if you decide that buying a cluster of System iWant 520s to run your applications makes more sense than buying a big System iWant 570. I made the software tiers make as much sense as I could. The iWant 520 is in the P05 tier, the iWant 550 is in the P10 tier, and the iWant 570 is in the P20 tier.

I have allowed IBM to charge a slight premium moving from the i5 520 to the i5 550 and then to the i5 570 chasses. Each box is progressively more expandable, and that takes both bent metal and engineering to support, which costs money. But, not very much and certainly not as much as IBM tries to charge. I gave IBM $850 for the i5 550 chassis compared to the i5 520, and $2,500 extra on top of that for the first i5 570 chassis. Memory and disks cost the same across all three types of System iWant machines. I then allowed IBM to charge a slight premium for machines that scaled beyond 200 users.

When you do this, what you get is a line of boxes that cost about $665 per user for the System iWant 520, $750 per user for the System iWant 550, and $800 per user for the System iWant 570 with fewer than 200 users, and $825 per user for iWant 570 machines that scale beyond 200 users.

This approach is very simple. Any sales person can say this sales pitch in a few sentences. My kids could sell this box. It is predictable. It is clean. It is different from other servers. And it focuses on what people really care about–how many users are on the system and ensuring that there is enough performance for them.

Now, if you don’t want a System iWant to Buy box, you can move the acquisition from a capital equipment investment to a lease, which sits on the operating expenses side of your company’s accounting ledgers. The System iWant to Lease comes with 5 percent financing, which splits the difference between the 4.8 percent financing on hardware and 5.1 percent financing on software that IBM is right now offering on its server product lines through its Low Rate Financing deal. In the second table in this article, I have calculated the lease payments on a 36-month, $1 payout lease for each of the 66 configurations. When you do the math, the cost of leasing the System iWant line ranges from $20 to $25 per month per user, or about $240 to $300 per user per year.

The System iWant presents OS/400 and i5/OS customers what seems to be a very generous deal. And next week, I will explain why I think this is important and what effect such an offering might have on the System i5 business.

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