On January 24, IBM published list prices for its latest iSeries models. As expected, those prices deliver dramatic savings to customers who intend to purchase or upgrade an iSeries server.

As I explained in my article last week, all of the new iSeries servers--with the exception of the iSeries 800--utilize a pricing system that is far simpler than that of the models they replace. For each model, users purchase one of two editions. The Standard Edition, which is similar to the "base" models of the existing 8xx series, provides no interactive performance and minimal software. The Enterprise Edition provides unlimited 5250 interactive performance along with IBM middleware and management tools, vouchers for educational offerings, and other benefits.

Since the i810, i825, i870, and the new i890 configurations use this pricing system, I'll start by examining their list prices. The following table shows list prices for configurations with the minimum amounts of memory and disk storage. For the i825, i870, and i890, list prices are for systems with the minimum number of active processors: three for the i825, eight for the i870, 16 for the i890-2497, and 24 for the i890-2498.

List Prices for the i810, i825, i870, and i890

¹ On the i825, i870, and i890, processor CPW ratings are for configurations with the minimum number of active processors.
² Interactive CPW ratings are only for Enterprise Editions of these models. Standard Editions provide no interactive performance.
³ List prices are for minimum configurations and do not include Software Maintenance contract charges.
⁴ Figures are obtained by dividing the Standard Edition list prices by the processor CPW ratings.
⁵ Figures are obtained by subtracting the Standard Edition list prices from the Enterprise Edition list prices, then dividing the results by the interactive CPW ratings.

As you can see from the table, the actual cost of adding interactive capabilities to these models via the Enterprise Editions ranges from $38 per CPW for the largest i890 to $81 per CPW for the i870. These prices are fractions of those that IBM charged for interactive CPWs on the previous generation of iSeries servers. Depending on the configuration, costs per interactive CPW for last year's 8xx models can run from around $200 to well over $500.

While the Enterprise Editions cost far less on a "per interactive CPW" basis than older models, that does not mean that all customers will benefit equally from those lower prices. Let's say that you purchase an i825 Enterprise Edition to support applications that consume an average of 100 interactive CPWs. Since the Enterprise Edition of the i825 costs $250,000 more than the Standard Edition, your effective cost per interactive CPW is $2,500. By contrast, if your applications consumed 1,000 interactive CPWs, you cost would be only $250 per CPW.

This demonstrates an important point: Customers whose applications chew up lots of interactive overhead will realize the biggest savings from buying or upgrading to the new models. According to price analyses that IBM sources have provided me, most customers who require 120 interactive CPWs will find that the Enterprise Editions of the new models cost 10% to 40% less than last year's 8xx models with comparable processor performance. Those who require 240 interactive CPWs will spend roughly 20% to 50% less than they did last year, while those who require more will realize even greater savings.

If you require less than 120 CPWs of interactive performance from your iSeries, your benefits from purchasing or upgrading will not be as great. In most cases, your price for an Enterprise Edition of this year's models will be less than that for last year's models under the old interactive CPW pricing system. However, most configurations will yield savings that are in the 10% to 20% range, with a few configurations costing slightly more than comparable configurations from last year. Of course, you could realize substantially greater savings by eliminating all interactive overhead from your applications via IBM's WebFacing Tool or similar products from vendors such as Jacada and Seagull. This would allow you to purchase a Standard Edition at a much lower price.

Of course, these price analyses do not consider the additional benefits of the Enterprise Editions that were not part of the old interactive CPW price system. Besides offering unlimited interactive CPWs, the Enterprise Editions include substantial bundles of IBM middleware and management tools, including WebSphere Application Server (WAS). Under the old pricing system, the software in these bundles costs tens of thousands of dollars on 1-way and 2-way servers, and hundreds of thousands of dollars on 4-way and larger servers. Under the Enterprise Editions, they are part of the package. How you value this software as part of your cost analysis will largely depend on which products you will use or need.

In addition, most of the Standard and Enterprise Editions are in lower software tiers than comparable configurations of last year's models. While you probably won't get a rebate check from third-party software vendors for switching to these models, you could pay tens of thousands of dollars less for IBM software. Any cost analysis you perform should include these savings.

A Word About iSeries 800 Pricing

Unlike its more powerful brethren, the iSeries 800 utilizes a pricing system that is similar to that of the old models. This entry-level model comes in three editions, each with a limited number of interactive CPWs. Here are the three editions along with their list prices and the differences between them. Note that in this table, list prices include one year of Software Maintenance, which comes standard with each edition.

List Prices for the iSeries 800

Two things about this table are important to point out. At the low end, the Value Edition offers an aggressively priced entry point to the iSeries that compares favorably with Intel servers. On the high end, the Advanced Edition essentially replaces the Model 270-2432 that IBM discounted last year under the GreenStreak promotion. At street prices, the Advanced Edition will probably sell for around $31,000 (about a 20% discount), making it only one to two thousand dollars pricier than the GreenStreak edition of the 270.

It's a Package Deal

As these analyses indicate, IBM's newest iSeries models provide significantly greater value for the price than last year's models. With the Enterprise Editions, however, the computer giant is delivering that value as packages of hardware, software, and services. To properly assess the value of those packages, you will need to consider each product and service in the packages, decide if you will need it, then consider its impact on your purchase decision.

After analyzing this announcement closely, I believe that the vast majority of customers will find that the Enterprise Editions save them money on software and services while lowering their interactive CPW costs. Those customers who are not part of this majority--and my guess is that most of them are running servers with minimal IBM software and no more than 70 CPWs of interactive overhead--should do what they can to convert their interactive workloads to batch mode so they can take advantage of the Standard Editions. Whichever avenue you take, you are sure to save a bundle.

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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