IBM wins users' hearts with radical shift in pricing policy

New IBM mainframe deals have been welcomed, writes Caroline Davis

New IBM mainframe deals have been welcomed, writes Caroline Davis

IBM is set to make a radical change in the way it licenses mainframe software, in a move that has been well received by industry experts.

Prices will be based on numbers of users, rather than the current system which bases costs on the size and power of the machine measured in terms of the mainframe's Mips (millions of instructions per second).

"The model IBM is preparing to implement is ideal," said Geoff Petherick of the IBM Computer Users' Association. "The concept of charging by the size of the machine has meant that users have had to pay through the nose."

The per-user pricing will be introduced when the next generation of S/390 mainframes is released later this year.

"The current pricing model is 20 years old," said Doug Neilson, IBM UK's manager of enterprise systems. "The problem is that it inhibits new pilots and small trials. Customers will now be able to pay a smaller price for a smaller number of users, and then pay more for a larger number of users."

He added that the pricing changes would be phased in over time and that the old pricing model would live alongside "for many years".

Isham Research analyst Phil Payne said he was delighted by the new model. "The old pricing model was nothing short of a catastrophe," he commented. Payne blamed previous pricing for forcing users off mainframes to Unix and NT servers, which they found a poor second.

But he warned that users may not see the benefits for several years. "It takes four years for the user community to adopt a new architecture," he said. "Development for 64-bit will not begin till next year and users will want 64-bit applications from independent software vendors. It will all be done gradually to maintain revenue."

IBM has revealed few details about the technical specification for the new machines which are codenamed "Freeway". But Nielson did confirm that it would offer a 64-bit architecture. "There are a lot of big Unix packages being targeted at 64-bit [computing]. Also, DB2 and Oracle work nicely on this architecture," he said.

Payne's ideal mainframe pricing model

  • Predictable pricing structure

  • True reflection of the business value of what the machine is doing

  • Lets very small users run software

  • Accommodates decreases as well as increases in machine size

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