IBM zEnterprise Update

IBM Corp. revised its mainframe pricing strategy with the new zEnterprise servers. Most fees decreased in the new environment. However, for the first time IBM is charging a fee to upgrade the specialty engines to the zEnterprise generation.

Focal Points:

• IBM is cutting memory prices by 75 percent and instituting an upgrade charge. Memory for any and all workloads is now set at $1,500/GB. Customers repurchase memory on upgrade at 50 percent of the purchase price. IBM points out that a customer with 224 GB of memory on a z10 EC would be indifferent to the pricing change if memory is increased by 15 percent when upgrading to a zEnterprise. Below that there is a slight hit and above it, customers save money under the new scheme.
• In a similar vein, the company is slicing specialty engine purchase prices by 25 percent and instituting an upgrade fee. The cost of IFLs are being reduce to $55,000 from $75,000, a 27 percent reduction, while the zIIP and zAAP specialty engines are being reduced 20 percent from $125,000 to $100,000. The upgrade fee from the z10 generation is 30 percent of the price while the one-time upgrade charge from an N-2 generation is 60 percent of the purchase price.
• The maintenance fees for the zEnterprise have also been reduced to 17 percent of the purchase price. The cost per engine drops from $1459 to $763 or in terms of MIPS the fee falls from $2.26 to $0.87. The one-time charge fees (OTC) for the Unified Resource Manager have two tiers. The entry-level manage tier is priced on a per connection basis with the cost of connecting to a Power blade or IBM Smart Analytics Optimizer (ISAO) priced at $1,600. There is no charge for an IFL connection. The automate tier is priced per connection at $5,000 for the Power blade, $1,600 for the ISAO, and $3,400 for an IFL. To migrate up to the automate tier from the manage tier, a customer pays the difference between the OTC fees.

Experton Group believes the IBM zEnterprise is being aggressively priced to both protect and grow the base. As IBM sees this platform as a strategic platform for reshaping the data center, the more aggressive pricing strategy will help drive sales. IBM has yet to release its new zEnterprise solution edition prices, which Experton Group believes will also make these offerings very competitive. IT executives with mainframes installed or those considering consolidated solutions should understand IBM's zEnterprise strategy, roadmap and current offerings to determine if it should be on the short list of target platform solutions.