When the AS/400 Pulsar and I-Star servers start shipping this month, AS/400 customers who have been pushing the performance envelope on their Model 170 or 7XX Northstar servers will be able to breathe a sigh of relief. The new AS/400 line demonstrates that, at least as far as raw performance is concerned, the AS/400 can hold its own against the best in the midrange. To prove that point and to assist the AS/400 sales team and Business Partners in competing for AS/400 sales against other midrange players—such as Sun Microsystems, Compaq Computer, and Hewlett-Packard—IBM’s competitive analysis gurus put together a little comparative guide that shows the new AS/400s stack up pretty well against the current crop of midrange UNIX and Microsoft Windows NT servers. While the information that IBM’s competitive analysis presents to sales representatives and resellers has a definite AS/400 bias in that IBM’s comparisons to Sun, HP, and Compaq servers reflect the way that AS/400s are configured—but not necessarily how those servers are configured when purchased by those vendors’ respective customers—the information does illustrate that the AS/400 has significant strengths in performance and price/performance that IBM should be able to exploit to extend the reach of the V4R5 range of AS/400s in the modern e-business world. At the very least, the information (which IBM has gathered for an internal report and which I will present in this article) will be useful to those AS/400 shops that find themselves in the position of having to defend an AS/400 purchase or to those AS/400 resellers or IBM sales reps who are trying to preserve and extend an AS/400 account.

But before I get into that, I’ll review a bit of history to give you some perspective on the V4R5 Pulsar and I-Star machines, which I detailed in the June issue of Midrange Computing (see “Midrange Insights: IBM Forges Hot AS/400 Iron and Announces V4R5”).

The competitive landscape for the AS/400 bears some resemblance to a situation in late 1995 when IBM was just starting to ship its first PowerPC RISC servers bearing the AS/400 moniker. Back then, the 4XX and 5XX AS/400s provided a quantum leap in performance capacity and represented dramatic improvements in price/performance as well. The improvements in power and value were absolutely vital in the then-maturing client/server applications market, and these initial RISC machines—with their modern Internet-enabled (by 1995 standards) operating system (OS/400) and updated DB2/400 database management system (which got support for parallel processing as well as for

triggers and stored procedures, among many other new features)—sold like proverbial hotcakes in 1996 and early 1997, even as IBM was getting ready to launch the Apache PowerPC servers in August 1997.

Here in 2000, client/server has been replaced by Internet-style e-business, and companies are looking at processing workloads that can double or triple over the course of a year. The V4R5 generation of AS/400 server hardware provides substantially more performance than the Northstar AS/400 generation (to say nothing of the prior seven generations of machines that are represented in the AS/400 installed base), and that extra power may be absolutely necessary (and maybe just sufficient) for many AS/400 customers as they expand out onto the Web.

The pity, at least as far as I can see, is that the dramatic price reductions that IBM delivered with the 1995 AS/400 generation did not come around again this time in 2000. The first RISC generation price cuts were, to say the least, stupendous. A heavily configured 2XX or 3XX generation AS/400 server cost $1,500 to $2,000 per transaction per minute (TPM) on the TPC-C online transaction processing benchmark test. With the 4XX and 5XX RISC generation, which really didn’t start shipping until early 1996, those configured server prices dropped to between $450 and $600 per TPM. It is worth remembering that Compaq ProLiant servers cost about $160 per TPM, while the AS/400 Model 40S “Compaq killer” server, which IBM announced in February 1996, costs about $250 per TPM.

While that four-way ProLiant server could only handle just under 4,000 TPM, it was a very attractive box for companies that wanted to support fledgling Windows NT applications. A four-way 53S server using IBM’s 154 MHz “Muskie” PowerPC chipset actually did less work and cost more than twice as much, even after the big price breaks. IBM has done much to close the pricing gap between AS/400s and high-end PC servers and UNIX servers, and while it has not yet announced TPC-C results for the new machines, Model 270s should be in the $25-per-TPM range and Model 8XXs in the $50- per-TPM range for heavily configured machines.

Part of the reason that IBM did not radically chop AS/400 prices for the V4R5 Pulsar and I-Star generation of machines is that, if it still wants to make its numbers, it cannot afford to. The other reason, as this review of IBM’s analysis illustrates, is that IBM does not believe that it needs to cut AS/400 prices to be competitive. IBM very clearly thinks that AS/400 pricing is competitive, and it would rather focus on the performance and ease of use of the AS/400 as an e-business platform. Regular readers of this column and of Monday Morning AS/400 Update know full well how I feel about IBM’s AS/400 pricing, but, just in case you need reminding, I’ll say it again: IBM’s tight integration for OS/400 is genius from a technical and marketing standpoint, but its bundled pricing drives away potential customers who suffer from sticker shock because they won’t take the time to analyze AS/400 pricing. With that said, the competitive situation, at least as far as IBM’s numbers show, seems to have improved with the V4R5 generation.

It’s money that matters, so take a look at how the Model 270 stacks up against current servers from Sun, HP, and Compaq in the midrange arena. Figure 1 shows a comparison among similarly powered midrange machines, including an AS/400, a Sun box, an HP server, and a Compaq PC server. IBM’s configuration for the PC server, detailed in its competitive analysis report, was not consistent with the AS/400 and the Sun and HP UNIX boxes shown in the figure, so I got pricing from Compaq and brought all of the machines in line. IBM’s intent was to set up servers to support 200 database users. The machines were all configured with a single processor, 1 GB of main memory, 90 GB of RAID 5 disk storage, a tape backup, a LAN card, an operating system, a database, and a one-year warranty. All of the machines include an integrated Java environment and Web server, which is standard in the business these days. With the exception of the Compaq ProLiant, operating systems are also bundled for “free” on the machines shown. The Sun and HP boxes were configured with Solaris and HP-UNIX, respectively, and with

Oracle8i Standard Edition, while the Compaq server was equipped with Windows 2000 Server and SQL Server 7.

IBM’s analysis shows that the AS/400 fares quite well against the Sun and HP solutions at the low end of the midrange, and it even suggests that AS/400 pricing is competitive with Windows server pricing.

IBM restricted its pricing comparisons with other platforms to machines that more or less match up against the Model 270 Pulsar AS/400 server in the same rough performance category. IBM is making its value proposition for the AS/400 with the Model 270, not just because its pricing looks good in this part of the AS/400 line but also because the Model 270 meets the power requirements of most of the core midrange customer base, consisting of companies within the $10 million to $50 million annual revenue bracket. Thus, these companies do not need a 24-way I-Star-based “Condor” server but find that a dual processor database engine, like a Model 270, more than meets their core application processing requirements. This is consistent with Compaq’s own PC server sales. Compaq is driving more and more of its growth with sales of machines that can support two processors or four-way machines that have only two processors installed from the get-go, leaving expansion room as workloads grow.

IBM’s pricing analysis shows that a Model 270-2252, capable of supporting 200 users, costs $48,401. By IBM’s reckoning of the transaction processing power of the AS/400, Sun, HP, and Compaq product lines (see Figure 1), the AS/400 is capable of processing about 9,500 TPM at a cost of just over $5 per TPM. (These machines are considerably skinnier than those that would be used in the real TPC-C test. And this price/performance amount does not include the cost of supplemental application servers, development software and middleware, or five year’s worth of maintenance as the real TPC-C test does.)

IBM has, for some inexplicable reason, given Sun the benefit of the doubt by comparing an Enterprise 250 server with one 400-MHz UltraSparc-II processor against the 450 MHz Pulsar Model 270. That Sun box can handle only about 5,200 TPM, which is considerably less than the 9,500 TPM that the Model 270 can handle. Because of its relatively poor performance, the Sun box (which, at almost $12 per TPM, costs over $60,000) offered much worse price/performance than the AS/400.

The HP L1000 server that IBM configured for its competitive analysis offers about the same performance as the Model 270 because it uses HP’s new 552 MHz PA-8600 chip. But HP is charging a huge premium for this chip, and the cost of a L1000 server configured just like the Model 270 skyrockets to $102,662. The end result is that the L1000 has almost twice the performance of the Sun box but costs almost twice as much as

the AS/400 and ends up with about the same poor price/performance as the Sun box.

A similarly configured Compaq ProLiant ML370 server, which has an 866 MHz Pentium III processor, costs essentially the same as the AS/400 and offers about 15 percent more throughput, yielding 10 percent better bang for the buck than the AS/400. This is a modest gap, and one that IBM can close easily with discounting.

Just because I am pleased to be able to say that, at least as far as low-end uniprocessors running modern database applications are concerned, the new AS/400s are competing effectively does not mean that I do not have a bone or two to pick with IBM concerning its value proposition. Take a look at the last line in Figure 1. It reads Cost for Web Serving Only, and it shows the cost of buying one of those four platforms if you want to use it just for Web serving rather than database serving. Because OS/400 includes DB2/400 bundled in—meaning you can’t buy an AS/400 without paying for it—the AS/400 costs the same whether it is a database server or a Web server. This is not the case with the other three servers in IBM’s comparison. The Sun and Compaq boxes cost half as much as the Model 270 for Web serving (assuming the hardware and operating system configurations do not differ from the database serving example), and they also very likely offer better MHz-for-MHz Web serving performance than the AS/400. (IBM has never published open Web serving benchmarks for the AS/400, so it is hard to say for sure

whether this is the case; however, Solaris, Windows, and Linux are the dominant Web serving environments, and that is not an accident.) The reason I bring this up is that it points out, rather clearly, how bundled pricing on AS/400s can work against the AS/400. I also have a problem with expansion costs on AS/400s compared to other platforms and with the fact that IBM’s comparisons did not include the cost of 5250 interactive features, which are required by a very large portion of the AS/400’s vast portfolio of applications. The Model 270, with no interactive, green-screen processing capacity, costs $20,000 in a base configuration. Adding a second processor to the 270- 2252, which converts it to a 270-2253, raises the price to $43,000. That’s right, an extra $23,000 for another 450 MHz Pulsar processor and the “free” OS/400 license to make use of its power. To add interactive processing power to that 270-2252 drives the price up to $70,000, and to add it to the two-way Model 270 would raise the price to $139,000.

Sun’s list pricing, which is available only on selected E250 configurations, makes it impossible to figure out the cost of a second processor. So does HP’s pricing on the L1000s, which is also vague. (There are reasons why IBM’s antitrust lawsuits were important to IT shops, and enforced list prices is one of the biggies.) But PC server vendors like Compaq that sell machines in this power class directly to customers provide all their list pricing on the Web for all components because they have to; otherwise, they can’t sell direct. It will come as no surprise to any of you that adding a second 866 MHz Pentium III processor to the Compaq ML370 server and boosting the performance of the machine

by 65 percent costs a mere $1,817. Clearly, IBM’s AS/400 pricing assumes that, when you add performance, you are adding users, while Compaq’s pricing assumes that you might be either adding users or needing better response time. This obviously does not always play in IBM’s favor. Adding a second processor to the AS/400 and ProLiant machines shown in Figure 1 to boost performance raises the price of the AS/400 configuration to $71,401, or $3.57 per TPM. For the Compaq setup, the two-way machine costs $50,620, or $2.81 per TPM, which is considerably lower than the AS/400.

Finally—and this is not really IBM’s fault but rather the consequence of timing—Sun is just about ready to revamp its server lines with the “Cheetah” UltraSparc- III processor. The company is expected to debut workgroup servers using 600 MHz and

750 MHz processors, and it will very likely cut prices, too, to be able to sell against Windows NT/2K servers. The new Cheetah servers will probably offer excellent bang for the buck compared to the AS/400. IBM’s numbers do not reflect this, because Sun is more than 18 months late in getting the Cheetah chips to market. Now there’s something to really crab about...but I’ve just run out of space.

Timothy Prickett Morgan is the midrange industry analyst for Midrange Computing publications. He can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it.
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AS/400 vs. Sun, HP, and Compaq Servers on 200 Database User Setups

IBM AS/400 Sun HP Compaq 270-2252 UE250 L1000 ML370 Base Server $20,000 $9,205 $15,570 $4,446 Main Memory to 1 GB $4,096 $6,300 $9,995 $3,915 90 GB RAID 5 Disk $21,200 $11,425 $38,675 $4,539 Tape, Other Peripherals $3,105 $1,350 $3,045 $1,112 Operating System $0 $0 $0 $8,788 Database $0 $32,000 $32,000 $25,168 Warranty $0 $0 $3,377 $485 Installation $0 $0 $0 $350 Total $48,401 $60,280 $102,662 $48,803

Estimated TPM 9,500 5,200 9,700 11,000

Cost Per TPM $5.09 $11.59 $10.58 $4.44

Cost for Web Serving Only $48,401 $28,280 $67,285 $22,800

Sources: IBM, Compaq

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