Last Tuesday, IBM's unveiling of the System i Express models set the midrange community on its ear. As I promised in my first article on the announcement, this week's column delves into what Big Blue is offering us. As you will see, there is something for everyone in the announcements, as IBM did more than roll out new systems. However, let's take a closer look at those systems before we check out the other goodies that the computer giant put on our plates.
Parsing the New Paradigm
The System i Express Models 515 and 525 break the mold of their entry-level predecessors by combining the full capacity of their POWER processors with per-user prices. Of course, that raises the question of what a user is. According to IBM, a user is anyone who accesses the i5/OS operating system or an application running on i5/OS. As such, anyone in your enterprise who accesses i5/OS should be counted as one user. IBM also counts people who are not part of your company as i5/OS users if they access i5/OS applications. It does not count people who access the System i but do not use i5/OS applications.
Here's an illustration of how this pricing model works. Suppose that a bank has 20 employees who access a System i Express. They also provide customers with online access to their accounts. In addition, they maintain a Web site on the System i that anyone can visit to see rates and check information on bank services and locations. In this case, IBM would count the 20 employees and the customers who access their accounts as users. Since the casual Web site visitors do not log in to an i5/OS application, they are not counted.
Now, let's add up the per-user costs for our bank. Since the bank cannot determine how many customers will access its online accounts, IBM provides an External Access License for these users at a flat fee of $3,995 on both the Models 515 and 525. As for the employees, IBM charges $250 per user for each user above the base number of users that comes with the system. The Model 515 comes with 10 users, so our bank pays for another 10 users at a cost of $2,500. If the bank were to buy a Model 525, which comes standard with 30 users, it would not need to purchase any additional users.
These same prices and terms apply to any other company. Employees who are i5/OS users cost $250 each above the base number of users. External users cost $3,995 as a group. Simple, isn't it?
As I mentioned last week, Model 810 and 520 users can upgrade their servers to the Model 525 (there are no upgrade paths into or out of the Model 515). So what happens when a company upgrades from these models, in which users are not counted for pricing purposes, to a Model 525 in which they are counted? If you are in this situation, start by determining the number of users you will need. Then, upgrade to the Model 525 configuration that most closely fits your user requirements. IBM has created three such configurations: one for 30 users, another for 150 users, and a third with unlimited users. (The per-user costs on the 150-user and unlimited configurations are less than $250, so they are great deals.) Finally, purchase any additional users you will need above the base levels for each configuration. If you have 50 users, for instance, you would upgrade to the 30-user configuration and pay for an additional 20 users. IBM sells additional i5/OS users for the Model 525 in packs of 10 users.
By the way, it is likely that many Model 810 owners will be upgrading to the Model 525 this year. That is because IBM announced last Tuesday that as of December 1, 2007, it will withdraw all remaining upgrades out of the Models 810 and 825 from marketing. If you are a Model 810 owner and want to preserve your serial number for tax purposes, the Model 525 will probably be your best move.
There is one more Model 525 that will interest many of you...the Model 525 Capacity Backup (CBU) Edition. Like other CBUs, the Model 525 CBU can provide both high-availability and disaster-recovery services for another System i. In the case of the Model 525 CBU, the primary server must be a Model 520 or 525. The Model 525 CBU has a starting price of $29,900 and will ship on April 20, the same date as all other System i Express models.
Good News for All of Us
One of the things that makes the Models 515 and 525 cost-competitive with Windows servers is their disk storage pricing. When it announced the models last Tuesday, IBM slashed the price of its 70GB disk drives by 50% and its 141GB drives by 40%. However, the computer giant did not limit these sharply reduced prices to the new models. It extended them to all models. While System i disk storage still costs more on a per-GB basis than it does on Windows servers, it is now in the same ballpark. That makes it significantly easier for thousands of System i models that are already in service to compete with Windows servers for new workloads.
Speaking of workload competition, many companies do not run their application servers on the System i because it costs less to do so on Windows systems. Last week, IBM partially addressed this issue by announcing an "application server entitlement" license. Under the offering, owners of System i Models 550, 570, and 595 can run their i5/OS-based application servers on one or more processors and pay only $14,000 to $19,000 per processor. That compares to the $41,000 to $59,000 per processor they had to pay before. To get the reduced price, customers must run their application servers in an i5/OS logical partition that is not running DB2 workloads. This "unbundling" of DB2 from the i5/OS license will help mid- to high-end System i models compete with Windows and UNIX servers for the logic layer of n-tier applications. This layer is a common feature of many collaborative and Web-based applications.
Last week, IBM also announced that it now offers 2.3GHz POWER5+ processors on its high-end Model 595. The new processors increase the top-end performance of the System i by 17% to 216,000 CPW. The performance boost is a welcome gift to Model 595 users who were running up against the limits of the older 1.9GHz processors.
While the spotlight was on new hardware last week, the announcement did include a handful of small yet significant software announcements. For starters, IBM enhanced its Web Enablement for i5/OS (5722-WE2) facility so that it fully supports WebSphere Application Server Express V6.0 and V6.1. In addition, Web Enablement for i5/OS now includes Express Runtime Web Environments, a tool that can reduce the time needed to install and configure Web serving environments. As for i5/OS itself, the operating system's management tools now provide further information on the performance of Web-based environments and offer advice on how to optimize that performance.
On the security front, IBM unveiled Secure Perspective for System i (5733-PS1), a tool that runs across multiple server platforms and enables organizations to define and implement security policies. Unlike most security tools, Secure Perspective uses a natural-language interface that lets non-technical decision-makers work more effectively with IT staff to define security policies. It also generates security compliance reports and issues alerts on security policy deviations or changes. Secure Perspective for System i runs on i5/OS V5R3 and V5R4 and costs $1,500 per managed processor.
Finally, IBM revealed in a Product Preview that it plans to replace its venerable Query/400 product during the second half of this year. The replacement—IBM DB2 Web Query for System i—is a customized version of Information Builder's WebFocus product. The new tool will use Web 2.0 technologies to let users run browser-based queries and output the results in a variety of formats. It will also include facilities to create boardroom-quality presentations. To get a better sense of what IBM DB2 Web Query for System i will offer, check out the Flash demonstration and read the FAQ that IBM has posted on its site.
The Soul of a New Strategy
While IBM's big announcement has a lot of moving parts to it, the good news is that those parts are meshing to drive the System i in some promising directions. Until last week, Big Blue had one foot stuck in the past when it came to packaging and pricing the System i. The company was still using differences in costs for interactive and batch capacity to encourage customers to modernize their applications. While that was a worthy objective for IBM to pursue with the installed base, the pricing mechanisms baffled prospective customers. In addition, IBM's hefty hardware premiums and its focus on total cost of ownership (versus acquisition costs) often alienated newcomers.
Last week's announcement marks a clear shift away from these practices. This does not mean that IBM has abandoned its old packaging and pricing policies. However, it has taken a decisive step away from them. That step demonstrates that the company is ready to engage with prospective customers on their terms rather than try to convince them to evaluate the System i on IBM's terms. It also indicates that the System i team is once again looking outward to new customers and opportunities after years of looking inward. In this analyst's opinion, these changes in attitude are the best things to happen to the organization in years. If they persist and take root in Rochester and elsewhere, we may one day look back on 2007 as the year when the System i turned the corner in what threatened to become a descent into the dustbin of IT history.
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
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