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IBM Announces New Software Pricing Options

Analysis of News Events
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Two weeks ago, IBM put the software industry on notice that prices for its middleware offerings will reflect the virtual IT infrastructures upon which they run. The company announced that it will offer sub-capacity software licenses not only for many of its own servers, but also for the servers of its competitors. By taking advantage of the licenses, customers who use IBM middleware could realize significant savings on software costs.

As many iSeries and zSeries customers know, IBM already offers sub-capacity licenses for selected middleware products that run on these systems. The licenses allow customers to pay per-processor charges only for the logical partitions (LPARs) on which the middleware runs instead of for all processors on the server. With its latest announcement, IBM is taking the same pricing model and extending it to other servers that support partitioning. The list includes IBM's pSeries running AIX as well as UNIX servers running Hewlett-Packard's HP-UX 11i and Sun Microsystems' Solaris 8 and Solaris 9. The list also includes Red Hat Enterprise Linux and SuSE Linux Enterprise Server running in LPARs on iSeries and pSeries systems.

For the moment, IBM is excluding servers that run Intel and AMD processors from sub-capacity pricing. However, IBM issued a statement of direction that it plans to offer such pricing for both 32-bit and 64-bit Intel-compatible servers--including its xSeries and BladeCenter servers--in the future. Support will be provided for Intel servers running both Microsoft Windows and Linux operating systems in partitions created with VMware ESX Server, VMware GSX Server, and Microsoft Virtual Server. Sub-capacity pricing for these platforms will likely become available by the middle of 2006.

As the following table demonstrates, IBM is offering sub-capacity pricing on a much wider portfolio of products than it originally did on the iSeries and zSeries. The portfolio now includes several DB2 products as well as many integration offerings within the WebSphere product family. Sources inside IBM have also confided that more products will be added to the sub-capacity list this year as the company enables them to provide utilization data to Tivoli License Manager. The product, which is provided free of charge with sub-capacity orders, monitors how many processors are running sub-capacity licenses and generates utilization reports for submission to IBM.


IBM Products Eligible for Sub-Capacity Licensing
Product Name
DB2 Data Links Manager
DB2 Net Search Extender
DB2 UDB Data Warehouse Enterprise Edition
WebSphere Application Server Network Deployment
5.1, 6.0
WebSphere Application Server
5.0, 5.1, 6.0
WebSphere Business Integration Event Broker
WebSphere Business Integration Message Broker
WebSphere Business Integration Message Broker with Rules and Formatter Extension
WebSphere Data Interchange
WebSphere Everyplace Connection Manager without WAP
WebSphere InterChange Server
WebSphere MQ
WebSphere MQSeries Workflow
WebSphere Portal Enable for Multiplatforms
5.0, 5.1
WebSphere Portal Extend for Multiplatforms
5.0, 5.1

In extending sub-capacity pricing to more products, IBM is largely adhering to the terms and conditions it originally used for iSeries and zSeries environments. To calculate their costs, customers add up the processors (including fractions of processors) that are in use by partitions running the middleware. They then pay a per-processor charge for this number of processors. If the sum of the processors is not a whole number (for instance, 6.3 processors), IBM rounds up the figure to the next whole number.

While these terms and conditions are familiar to iSeries users, other terms are unique to the current offerings. As mentioned earlier, the new sub-capacity licenses require Tivoli License Manager to be installed on the server (this requirement does not apply to existing sub-capacity licenses on the iSeries). The product is free of charge, but it does consume 1 GB of memory. In addition, customers who hold full-capacity licenses to any of the eligible products can convert them to sub-capacity licenses and transfer them to other servers. Customers can only convert full-capacity licenses that are covered by an IBM Software Maintenance agreement at the time of conversion.

As it is expanding its sub-capacity software offerings, IBM is also enhancing the virtualization facilities that can support the solutions. Three weeks ago, for instance, Big Blue announced a virtualization facility that reduces the cost of running Linux LPARs on smaller iSeries servers. The offering, Virtual Partition Manager, enables customers to create one i5/OS LPAR and up to four Linux LPARs on eServer i5 models without having to use a Hardware Management Console (HMC). Since smaller iSeries models seldom support more than four Linux LPARs, the new offering could eliminate the added cost of an HMC for many server purchases. Customers should note, however, that Virtual Partition Manager does not support the dynamic resizing of LPARs. In addition, Linux partitions must use virtual I/O connections to access storage and network resources. In cases where these limitations pose no problems, the new offering will be a welcome and economical option.

IBM is also shipping a new iSeries virtualization offering that should prove attractive to customers with AIX expertise. The offering, Virtual I/O Server, creates a dedicated LPAR on eServer i5 models to provide I/O services to AIX and Linux LPARs. While users can already manage virtual I/O through i5/OS, the new offering enables AIX administrators to perform this function using the same facility found on IBM's pSeries systems.

Between IBM's expanded sub-capacity pricing and its enhanced virtualization offerings, iSeries customers have several more reasons to partition their servers. Admittedly, the current portfolio of sub-capacity licenses covers products that are mainly used by large enterprises. Over time, however, IBM will offer such licenses for more of the products that mid-market companies use. As such, iSeries customers should keep an eye on the company's software pricing announcements over the coming months.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.


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