New IBM iSeries pricing won't benefit all users

Not all users of IBM Corp.'s iSeries systems will benefit from the new software pricing and upgrade options the company announced in January, according to users at the Common trade show held in the US last week.

While the changes generally reduce complexity and increase cost-effectiveness, some small and midsize shops could face unexpected price increases as a result of the changes, users said.

"Overall, it's a very good effort," said Len R. Eckert, IT director at Jim's Formal Wear Co. in Trenton, Ill. "But there are some customers who will get hurt from it."

"It's fine for what we are doing, but I'm not sure it will work for everybody," added Michael Watson, e-commerce manager at Carhatt Inc., a clothing manufacturer in Dearborn, Mich.

Ian Jarman, an IBM pricing executive, this week acknowledged that some users could see price increases in moving to the new models. But he said the changes were made in response to long-standing demands by users for less-complex license structures.

Impact Varies

The impact of the changes will vary depending on "where you were buying in the previous pricing range and where you will be buying in the new range," Jarman said. But for most users, he said, the move should be a positive one.

IBM in January announced a major pricing change along with several new iSeries hardware models -- previously known as AS/400 systems -- featuring a wide range of integrated middleware products.

Users that upgrade their systems to the new models will have the option of choosing either a Standard Edition or an Enterprise Edition software package. The Standard Edition offers a bundled database, an on/off capacity-on-demand feature and partitioning capabilities. But users won't have the ability to run green-screen applications -- or interactive workloads -- on their iSeries systems.

Enterprise Edition users pay a higher upfront fee for a wider set of middleware products and the ability to use the entire capacity of their iSeries systems to run interactive workloads.

According to Jarman, the new pricing structure allows most users to get far more green-screen processing power for substantially less money than they would have paid under the previous license model. It also eliminates the performance caps and complexity associated with the previous multitiered pricing structure. But some users, particularly those with smaller workloads, will find little benefit, users said.

Because of the way the pricing is structured now, a company with a relatively small 100-commercial-processor-workload interactive requirement, for instance, could be forced to sign up for the enterprise package on a higher-end box, even if the unlimited green-screen ability that comes with it isn't needed, Eckert said.

"It would be overkill for them," he said.

'State of Flux'

Only a "small subset of accounts" are likely to need the unrestricted green-screen use promised by the new pricing structure, said Jeffrey Corey, a regional sales manager at Computer Configuration Services, an IBM business partner in Indianapolis. Others are still in a "state of flux" over whether to go with the Standard Edition and Web-enable their green-screen applications, or to choose the Enterprise Edition when upgrading, he said.

"I've seen looks of sticker shock" over the price difference between the two pricing models, Corey said. In one test configuration for a customer, the difference between an enterprise software package and a standard one on the same piece of hardware was US$102,000, he said.

Users who have already separately purchased much of the software that IBM is now bundling with the higher-end hardware models are likely to see less benefit as well, said Eric Songy, director of IS at Standard Companies Inc. in New Orleans.

As a result, they should get some credit for those investments, he said. Otherwise, "you are paying for a bundle without getting credit for what you have already paid for."

While acknowledging such issues, Jarman maintained that those users will still get additional benefits from some of the new performance tools and software that IBM is bundling with the new iSeries hardware.

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