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By | Timothy Prickett Morgan 14th August 2009 21:41

Big Blue bundles pound down mainframe prices

New workload push and pull

IBM wants to get more workloads running on more mainframes, and is willing to slash prices to do so - but shops will have to put new workloads designated by IBM as "solution editions" to get cheaper iron.

Solution editions are nothing new at IBM - they've been peddled on the venerable AS/400 and successor iSeries, System i, and Power Systems midrange boxes for more than a decade.

To create a solution edition, IBM sets up a preconfigured system aimed at supporting a particular stack of application and systems software, tunes up a few variants with a few different pricing options, and cuts the price to entice customers to buy this setup rather than build their own stack in a piecemeal fashion.

The goal is not just to sell a bundle (of hardware and software) and make a bundle (of profit because the cost of sale is lower), but to compete against Windows, Linux, or Unix machines that compete with IBM's proprietary midrange and mainframe platforms.

In the case of the mainframe, the goal is to have a z/OS-based setup compete with high-end RISC/Unix boxes, and against the Itanium-based Integrity boxes from Hewlett-Packard now that Sun Microsystems has lost its bearings and has wandered into the opening maw arms of Oracle.

With the Power Systems machines running the i6.1 operating system, the kicker to OS/400 and i5/OS, the goal is to compete against the Windows platform, which dominates the midrange these days like AS/400s, DEC VAXes, and HP minis uses to.

IBM doesn't normally talk much about mainframe prices. And you can forget about list prices for this iron or monthly fees on its z/OS operating system or the DB2 and IMS databases, the CICS transaction monitor, and other software that typically ends up on a mainframe.

List prices for mainframes - which certainly do not establish a floor for street prices, but rather a ceiling to start discounting from - went out the door thirteen years ago when Big Blue wiggled out of the antitrust consent decree that had governed its behavior for 40 year. But Karl Freund, who is in charge of System z strategy and marketing (and had previously held that similar post in IBM's AIX server business), revealed some numbers on how the System z Solution Editions are expected to stack up.

Here's how the math works, according to Freund: the System z Solution Editions come with all of the hardware, software, and maintenance costs for a three-year or five-year term, and customers pay a single price for a mainframe that's set up for application development, data warehousing, disaster recovery, or risk mitigation. Other bundles allow the mainframe to act as a security hub for the entire enterprise, or run WebSphere middleware or an SAP ERP suite.

The total cost of acquisition is calibrated to be within 20 per cent of the cost of a comparable setup running on an HP Integrity server running HP-UX - meaning 20 per cent more, obviously. This puts the System z within spitting distance of a Unix box, heping the IBM sales rep to make the sale based on the nebulous total cost of ownership advantages that IBM always espouses for its proprietary platforms.

But here's the kicker - and why these Solution Editions for the System z boxes might see some traction: for the workloads outlined above, the Solution Edition costs anywhere from 50 to 80 per cent less than current mainframe prices for z/OS setups running the exact same software.

"This is not a fire sale," explains Freund. "This is a new pricing model for competitive System z value."

IBM may believe that, but is sure looks like a fire sale to help drive new workloads to the mainframe. And for good reason, since the mainframe has around 10,000 footprints and drives maybe $3.5bn to $4bn in hardware sales each year. These footprints drag along tens of billions of dollars in software, services, and support fees and deliver billions of dollars in profits to IBM's bottom line.

This is every bit as much of a fire sale on mainframe capacity for new workloads as is the Integrated Facility for Linux engines on mainframes, which are configured only to run Linux. The prices for these IFL engines started out being about a quarter the price of a mainframe engine, which runs to around $400,000 to $500,000 a pop, and has come down over the years.

What took you so long?

The Solution Edition pricing is not just available to customers who buy new System z10 Business Class (BC) or Enterprise Class (EC) mainframes using IBM's quad-core z6 mainframe engines, but is also available for existing users of z10 mainframes and their predecessors, the System z9s. Customers using the z9 and z10 machines can activate engines on their boxes and run the Solution Edition stack in a logical partition and get the same cheap pricing for the stack. Customers do have to be running z/OS 1.9 for a bunch of these bundles, but some have Linux options.

Why hasn't IBM put Solution Editions for the mainframe into the field already? Freund says that IBM has been working feverishly for the past three years to get a broad and deep portfolio of applications running on the System z machinery.

Today, the IBM mainframe has over 5,000 unique applications, and 2,800 of those are running atop Linux inside the z/VM hypervisor. According to IBM, about half of the 1,000 applications that were new to the System z platform or updated to run on modern operating systems in 2008 were for Linux, with the remainder being mostly for z/OS.

The System z SAP Solution Edition was quietly announced last October when the midrange z10 BC mainframes came out. The z10 BC mainframes make use of z6 engines that have only three working cores (one of them is a dud that is electronically isolated), offer from one to five engines for supporting z/OS, and can have up to ten Linux engines and up to ten coupling facility engines for running IBM's Parallel Sysplex clustering software.

Aggregate processing capacity for the z10 BC boxes ranges from 20 to just under 3,000 MIPS. The z10 EC machines, which debuted in February 2008, have top-speed 4.4GHz quad-core z6 engines rated at 920 MIPS with no SMP overhead and span up to 64 engines for running z/OS, with a performance range that spans from about 200 to just under 30,000 MIPS after paying the SMP overhead on a 64-way box.

IBM is particularly excited about the prospect of customers adding more workloads to existing mainframes not just because the boxes can scale, but because mainframes tend to get cheaper per unit of work as they get bigger - and customers are well aware of this.

While IBM didn't say this, you can bet that the steepest discounts it's offering on Solution Edition configurations will be for customers who put the software on an existing box and boost their commitment to the mainframe. This Solution Edition strategy was always as much about preserving footprints as extending them with the AS/400 and its progeny, and it is no different with the mainframe.

Based on the success of the SAP Solution Edition, IBM is cooking up a mainframe bundle for running Oracle's PeopleSoft ERP suite, which runs natively on z/OS. Freund says that IBM is also working on a Solution Edition that makes the mainframe an air traffic controller for cloud-based services.

So what's in the six new System z Solution Editions? IBM is a little vague on the details.

The SAP bundle includes database partitions running DB2, and application partitions as well as IBM's DB2 Connect software for providing encrypted links between the SAP database running on z/OS and application servers running on mainframe Linux if customers want that - and given the price difference, they will. RACF provides security across all the partitions.

The data-warehousing bundle includes its DB2 database as well as Cognos business intelligence tools and the InfoSphere Warehouse layer that rides atop DB2 to add cubing services to the OLAP processing capabilities of DB2.

IBM's spec sheet for the security-hub bundle doesn't itemize the software (which seems odd), while the risk-mitigation bundle is based on the Base24-eps electronic payment software from ACI Worldwide tweaked to run on z/OS and to integrate with DB2 and WebSphere running on the mainframe.

The disaster-recovery bundle turns a mainframe or some of its logical partitions into a geographically dispersed Parallel Sysplex (GDPS) high-availability cluster, which allows mainframes to have hot standbys of running applications in the same metro area (200 kilometers or less).

The WebSphere bundle runs IBM's WebSphere middleware, but more details were not available at press time.

The application-development bundle puts the Rational Developers Toolkit for System z on a cheap z10 BC box or partition that gives each programmer a z/VM slice to play with as they create and test code. This bundle does not have the Windows-based Rational Developer for System z (RDz) client software - RDz is not a part of the bundle yet. But programmers that use RDz can deploy their apps to the images on the mainframe controlled by the z toolkit. IBM could just bundle it all together and make it simpler - and probably will. ®

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