The IBM System i has been slow at bat during the first quarter, with a drop in revenues of 22% (see "System i and IBM 1st Quarter Financials"). The message to System i marketing from industry watchers and ISVs in the stands then came out loud and clear: "Do something! Quick!"
Now System i marketing has finally come to the plate, and it hopes this latest marketing pitch will put them back on base with loyal customers and concerned ISVs.
On May 2, 2006, IBM announced significant price adjustments to its lineup of System i servers. These adjustments are aimed at encouraging current and potential customers to re-evaluate their current system requirements in light of substantial discounts that IBM is offering on certain System i models—discounts ranging from 4% to as much as 22 % over previous tiered pricing.
In addition, IBM announced that it would pay rebates of $70,000 to $130,000 to customers that take advantage of selected IBM ServerProven offerings.
The Play
The System i price reductions are aimed at providing a higher level of value for companies considering an upgrade to specific 550, 570, or 595 models from less-powerful models. In addition, there are added incentives for customers that have requirements for the Enterprise Edition i5/OS operating system.
The table below shows a summary of the System i editions and feature codes affected by these aggressive discounts:
| Edition | FC | Previous Price | New Price | Change in $ | Change in % | |
| 550 Enterprise Edition | 7155 | $270,000 | $220,000 | -$50,000 | -19% | |
| 550 Solution Edition | 7630 | $210,000 | $170,000 | -$40,000 | -19% | |
| 550 Oracle JDE Edition | 7631 | $204,000 | $165,000 | -$39,000 | -19% | |
| 550 C2CRM Edition | 7632 | $203,000 | $165,000 | -$38,000 | -19% | |
| 550 HA Edition | 7551 | $240,000 | $190,000 | -$50,000 | -21% | |
| 570 Enterprise | 2/4 w | 7747 | $449,000 | $349,000 | -$100,000 | -22% |
| 570 Enterprise | 4/8 w | 7748 | $533,000 | $463,000 | -$70,000 | -13% |
| 570 Enterprise | 8/16 w | 7749 | $735,000 | $665,000 | -$70,000 | -10% |
| 570 HA | 2/4 w | 7763 | $381,000 | $289,000 | -$92,000 | -24% |
| 570 HA | 4/8 w | 7764 | $433,000 | $363,000 | -$70,000 | -16% |
| 570 HA | 8/16 w | 7765 | $635,000 | $565,000 | -$70,000 | -11% |
| 570 CBU | 2/16w | 7760 | $365,000 | $295,000 | -$70,000 | -19% |
| 595 Standard | 8/16 w | 7480 | $775,000 | $715,000 | -$60,000 | -8% |
| 595 Standard | 16/32 w | 7482 | $1,175,000 | $1,055,000 | -$120,000 | -10% |
| 595 Standard | 32/64 w | 7486 | $1,985,000 | $1,745,000 | -$240,000 | -12% |
| 595 Enterprise | 8/16 w | 7481 | $1,555,000 | $1,495,000 | -$60,000 | -4% |
| 595 Enterprise | 16/32 w | 7483 | $1,975,000 | $1,855,000 | -$120,000 | -6% |
| 595 Enterprise | 32/64 w | 7487 | $2,855,000 | $2,615,000 | -$240,000 | -8% |
| 595 HA | 8/16 w | 7580 | $1,355,000 | $1,295,000 | -$60,000 | -4% |
| 595 HA | 16/32 w | 7581 | $1,775,000 | $1,655,000 | -$120,000 | -7% |
Note that the real gain in price/performance is the adjustment made for increased power of the multi-processor systems with the Power5+ processors. These discounts are aimed at moving customers to the newer technology of the faster processors' configurations.
Click here for a complete rundown (in PDF) of all model price changes.
ServerProven Solution Rebates
In addition, IBM is once again making substantial rebates available for customers that choose the ServerProven package of bundled applications called "global Independent Software Vendor (ISV) solutions" (from Infor Global Solutions, Intentia, Lawson, Oracle, SAP, and SSA).
Customers can receive a rebate if they acquire a new ServerProven solution that includes an eligible new System i or xSeries server, or an eligible conversion or processor upgrade to an installed IBM iSeries or System i5 server in combination with an eligible ServerProven IBM or non-IBM software solution.
The amount of the rebate can be equal—under certain conditions—to as much as the invoice price of the ServerProven software solution itself. IBM says that this can range from $70,000 to $130,000. For more information about this modified IBM ServerProven solutions rebate program, click here (PDF file).
More Rebates
Finally, IBM made further modifications to the rebates available for other ServerProven solutions, which may be of importance to your company. For more information about these rebates, click here (PDF file).
Will It Be Enough?
Will this sudden surge by IBM System i marketing be enough to move customers and Business Partners around the bases? The organization has had a very spotty batting record the last two quarters. It did well during this time last season, moving the platform to growth for the first time in a number of seasons. But then it faded in the last quarter of 2005, and that slump moved into the current year when Peter Bingaman turned over the marketing team to Elaine Lennox at the end of 2005 (see "Top iSeries Marketing Guru Makes Transition").
Elaine Lennox promised ISVs and Business Partners to continue to build the momentum for the System i with a continuation of rebates and incentives (see "The Excitement and the Challenge of Marketing i5"), but until these most recent announcements, it seemed she was having difficulty fielding the market team, resulting in yet another quarter of disappointing revenues.
Meanwhile, it looks like the System i ISVs are warming up since Oracle announced that it would increase support for JD Edwards on the System i (see "Oracle Expands Support for JD Edwards and the System i5"). This is excellent news for older iSeries customers who run the JD Edwards suite of products.
Next at Bat?
Last week's price adjustments are sure to get a certain number of customers and ISVs on base. But loading the bases isn't going to be enough. In order to turn around this year's game, Lennox has to come up with a strategy that will bring in some real runs against the growing competition.
Stay tuned to find out how the game plays into the seventh-inning stretch. Rumor has it that more announcements are coming this week, so it looks like it's going to be a real nail-biter of a season.
Thomas M. Stockwell is Editor in Chief of MC Press Online, LP.
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