IBM Puts Finishing Touches on eServer i5 Models

Analysis of News Events
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Last Tuesday, IBM took its eServer i5 models and tuned them up in several key areas. At the same time, the company pledged that it would neither add new eServer i5 models nor boost the performance of existing models for the rest of this year. While IBM's announcements were modest in scope, their impact will be significant for iSeries customers who are considering an eServer i5 purchase.

Among IBM's announcements last week, one of the most important was the unveiling of two high-performance configurations of the Model 520 Express Edition. The configurations, which offer 2,400 CPW of batch performance and 60 CPW of interactive performance, have twice the memory and more than twice the throughput of previous high-end Express Edition models. The first configuration comes with two 35 GB mirrored disk drives and will be sold by IBM Business Partners at a suggested list price of $42,000. The second configuration sports a RAID-5 array of four 35 GB drives and costs $48,000.

The new Express Edition configurations could prove highly popular among iSeries Business Partners and customers, and for good reasons. Both configurations can support up to 10 logical partitions (LPARs) versus the four LPARs of the previous high-end Express Edition models. This lets them act as consolidation platforms for multiple workloads running on other servers, especially workloads that can run on Linux. Indeed, IBM priced the configurations so that they can compete with Intel servers for such workloads. With its $42,000 price tag, the 2,400/60 CPW configuration with two 35 GB disks costs $17.50 per batch CPW. By my accounting, that is the lowest cost per batch CPW of any fully configured eServer i5 model that supports interactive 5250 workloads.

While the new Model 520 Express Editions could vie with Intel servers for workloads, they could also compete with a similar Model 520 Enterprise Edition configuration. That configuration--the 520-0903 with processor feature code 7453--costs around $60,000 more than the new Express Editions even though it has the same batch CPW rating as these models. That extra $60,000 does buy unlimited interactive CPWs, a 20-user license to WebSphere Portal Express Plus, and a voucher for one IBM service. However, customers who are considering this Enterprise Edition may choose the new Express Edition configurations if they have less than 60 CPW of interactive workloads. At a savings of $60,000, they would be wise to do so.

Speaking of savings, IBM also announced a new eServer i5 Solution Edition that costs considerably less than the previous model. As many of you know, the current Solution Edition is a Model 550 that hosts applications from selected vendors. Customers who run these applications on a Solution Edition receive a $60,000 price break on the Model 550. Since many customers cannot afford a Model 550, IBM announced a Solution Edition that is based on a Model 520 Enterprise Edition running at 1,000 CPW. At its list price of $39,500, the Model 520 Solution Edition represents a discount of $8,500 from the Enterprise Edition upon which it is based. To qualify for the discount, customers must purchase at least $25,000 in eligible software from vendors that participate in the Solution Edition program. These vendors include Agilysys, Clear Technologies, CommercialWare (which is new to the program), International Business Systems, Infor Global Solutions (by virtue of its purchase of MAPICS), Jack Henry & Associates, Lawson Software, Manhattan Associates, Oracle Corporation (via its acquisition of J.D. Edwards), Retalix (through its purchase of Integrated Distribution Solutions), and SSA Global. Intentia and SAP also participate in the program, but only on the Model 550 Solution Edition.

Software Maintenance Gets a Makeover

Last Tuesday, IBM also changed how it prices software maintenance to make it easier for customers to run multiple operating environments on eServer i5 models. Effective July 22, the company will change the way that eServer i5 users pay for Software Maintenance (SWMA) contracts on i5/OS and i5/OS licensed programs. Under the old system, customers paid a fixed price on a per-server basis that was tied to the software price tier of the server. Under the new system, customers will pay a fee for each active processor that is running i5/OS. The change to per-processor SWMA pricing will apply to eServer i5 customers only, not to iSeries or AS/400 models.

IBM is taking this action because growing numbers of eServer i5 customers are paying SWMA on processors that are not running i5/OS--for that matter, are not running anything because they are inactive processors. For instance, consider the case of a 5/8-way Model 570 in the P40 software tier. Under current per-server prices, customers must pay $42,290 for a one-year i5/OS SWMA contract whether they have one active processor running i5/OS or eight active processors doing the same thing. If they choose to run AIX or Linux on some or even most active processors, they still must pay the same fee for i5/OS SWMA. As a result, SWMA prices on many eServer i5 models are out of alignment with the value they provide. By contrast, IBM and other system vendors typically charge per-processor fees for maintenance on their Unix operating systems.

By tying i5/OS SWMA prices to the number of active processors running the operating system, IBM is making its maintenance pricing more flexible and as equitable as possible for the largest number of customers. As the following table indicates, many or even most eServer i5 users--especially those running servers in the lower software tiers--will end up paying less under the per-processor price system than they do under the current system. However, IBM will give customers the opportunity to purchase or renew their i5/OS SWMA contracts on a per-server basis until September 30 of this year if doing so makes financial sense for them. The company is also limiting the number of i5/OS SWMA instances that Model 595 users must purchase or renew to 16 processors through the end of this year.

Per Processor Prices for i5/OS SWMA Versus Per Server Prices
Software Tier
Model(s) in Tier
# of CPUs
Old System
New System
1-Year Price per Server
3-Year Price per Server
1-Year Price per Processor
3-Year Price per Processor
520, 550
1 to 4
1 to 4
5 to 16
8 to 32
33 to 64

In a related announcement, IBM also changed the number of active i5/OS processors that come standard with Model 570 servers in the P40 price tier. Until last week, such servers came standard with four active i5/OS processors. That created a problem for customers with significant AIX and Linux workloads, as many of them did not require four i5/OS processors. In response, IBM is reducing the number of active i5/OS processors that come standard on these servers to one, the same number offered on all other eServer i5 Standard and Enterprise Edition servers except the Model 595. Since the change removes the cost for three i5/OS licenses from the Model 570, it will make the server more attractive as a Linux and AIX workload consolidation platform.

While IBM's latest announcements will have significant implications for companies buying the eServer i5, there is one thing they will not do. They will not put buyers through the confusing process of sorting through a slew of new models to understand what they should purchase. IBM purposefully avoided saddling the market with new models or "performance kickers" to existing ones. That decision says two things about the state of the market. First, it indicates that customers and Partners are not telling IBM that they need more powerful models at this time. Second, it indicates that server sales must be humming along fairly well, as Big Blue would have made more dramatic changes to the eServer i5 product portfolio if that were the case. It will be interesting to see how iSeries sales are faring when IBM announces its second quarter financial results later today.

There were a number of other details in last Tuesday's announcements that I do not have space to discuss here. I'll examine those details and take a closer look at the new SWMA pricing system in a future article, so stay tuned.

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
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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