IBM takes steps to relieve iSeries pricing pain

IBM will roll out new hardware, pricing and upgrade options for users of its iSeries systems this week as part of a $500m (£311m)...

IBM will roll out new hardware, pricing and upgrade options for users of its iSeries systems this week as part of a $500m (£311m) effort to revitalise the 25-year-old midrange server line.

The overhaul will address several long-standing user concerns and make the iSeries machines more appealing to first-time buyers.

IBM will also invest more on marketing to boost interest in the iSeries technology among software suppliers and resellers.

Perhaps the most important development is a change in the way IBM charges users that run host-based, green-screen applications on machines in the iSeries line, which was previously known as the AS/400.

Under IBM's new Enterprise Edition pricing model, companies will pay flat fees, depending on the model, that allow them to use the full capacity of their machines for running 5250 terminal sessions.

The approach replaces a complex and very unpopular pricing scheme under which IBM charged iSeries users an "interactive workload" fee for running 5250 applications. The multi-tiered pricing structure meant users paid progressively higher fees with almost every increase of their interactive workloads.

IBM product manager Ian Jarman claimed Enterprise Edition pricing could improve price/performance on the iSeries line by up to 80% in some cases, because the new pricing allows users to use the full capacity of the system for running interactive applications without paying anything extra.

Gartner analyst Thomas Bittman said the new pricing model would encourage iSeries users to upgrade their systems and expand their use of 5250-based applications to more end users. "We have long considered part of the iSeries installed base to be a cash cow, because IBM was charging so differently for interactive use vs. noninteractive use."

IBM will also announce four new iSeries models, including a pair of systems that are based on its Power4 processor and will join the i890 at the high end of the server line.

The i870 and i825 come with a capacity-upgrade-on-demand feature that lets users switch on additional processors when they need them. For example, a company could turn on an extra processor in an i825 and pay a fee of $1,100 for each day it is used, Jarman said. They could also buy the additional processor outright for about $50,000.

The temporary upgrade capability would let users quickly access additional CPU capacity without having to shut down a system or reconfigure it.

Although iSeries systems still enjoy immense popularity among existing users, analysts said IBM has been unable to make much headway in attracting new users or application workloads to the platform.

IBM's iSeries business unit general manager Al Zollar said much of the drop-off in iSeries sales to new buyers has resulted from the increased popularity of Windows servers. IBM will launch a much more vigorous marketing campaign to boost the profile of the iSeries line within its installed base and with users of other systems

The company will spend an extra $20m over the next two years to help resellers market the machine. It will also host more than 200 customer events worldwide to highlight the potential benefits of iSeries systems.

On the technology front, IBM will continue to build on the ease-of-management and software-integration features that have been hallmarks of the iSeries line. Zollar cited as an example IBM's move to bundle a wide range of its middleware products with the new high-end iSeries models being announced this week.

"The iSeries has been known to deliver simplicity, ease of use and tight integration," Zollar said. "But in the past, [the systems] have been based on proprietary technologies. The future is about the same message on an open infrastructure."

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