March 6, 2017 Timothy Prickett Morgan

Back in the early days of the AS/400 midrange system, the processor, memory, networking, and disk and tape storage hardware embodied in the system was by far the most costly part of that system, far outweighing the cost of the systems software that ran atop it. We dont have the precise numbers at hand, but it was something like 85 percent hardware cost and 15 percent hardware cost.

Fast-forward a few decades, and the Moores Law improvements in every component in the hardware means that hardware is far less costly. But software doesnt have a Moores Law scaling; in fact, it is based on people and they cost more every year. And so software now represents a very large portion of the overall Power Systems-IBM setup these days. So customers are often in a position where they want newer, more powerful, and more capacious hardware but they cannot inexpensively move their existing IBM i and related system program licenses over to the new iron.

IBM has not cut prices for IBM i in recent years, as far as I know, and I have to guess because it is no longer possible to get list prices for anything in an easy fashion. Even partners have to use a configurator to get pricing, and it has to be tied to a particular customer and a particular set of serial numbers on machines for this information to be disseminated. (Again, this is as far as I know.) What I do know is that the list price system on IBMLink that I used for decades is no longer there. In any event, IBM i software has gotten a little more expensive over time when gauged in U.S. dollars and IBM is loath to cut prices. But every now and then it does something in special deals to make it a little less costly for customers with older machines to move to newer machines with regard to software pricing, and it has done it again with the new Power S812 Mini system that was announced for IBM i and AIX operating systems back on Valentines Day and that will be shipping on March 17.

Under the IBM i Power License Transfer Free promotion announced last week, which like the last such deal that was announced for earlier Power8-based systems in May 2016, offers customers a waiver on the fees that Big Blue charges to move an operating system. As has been the case for many years, IBM charges $5,000 per core to move an IBM i license from an old machine to a new one. This transfer fee seems absurd, as I have pointed out before, for a low-end system where the operating system only costs $2,995 per core. Or, more precisely, as I think it costs because that is what IBM used to charge per core in a P05 tier the last time I saw a list price on IBM i. I can see a $500 transfer fee for a license that has already been paid for, and I can make a very strong case for zero being a good fee in a world where IBM wants to get customers current. As detailed in the IBM i Processor and User Entitlement Transfer guide, IBM cushions the blow somewhat by saying that the $5,000 fee includes one year of Software Maintenance at no charge, which I think is funny for something that costs $5,000. And any Software Maintenance that you have paid for does not transfer from the old machine to the new one, also funny. But I have a warped sense of humor.

By the way, as you can see from that IBM i Processor and User Entitlement Transfer guide, the transfer fee is not a flat $5,000 across all classes of machines. That is just for a P05-class system that is transferring to another P05-class machine and within special groups organized by IBM. If you jump from Group 1 to Group 2 or Group 3 machines, the IBM i transfer fee is $18,000 per core, and from Group 4 to either Group 5 or Group 6 it costs $17,000 per core.

On February 28, IBM said in an announcement to business partners that it would allow customers to transfer IBM i licenses from the old machines to the new Power S812 for free, saving them the $5,000 per core charge. This is obviously a good thing, particularly if the Power S812 costs around 20 percent less than the Power S822 and Power S824 machines of similar single-core, light memory configuration. Every little bit helps. But 64 GB of memory cap on IBM i setups seems a bit light, perhaps even for a single 3 GHz core as the Power S812 machine has.

To take part in the IBM i Power License Transfer fee promotion, the old machine has to be installed for the past year or more and the new Power S812 machine has to ship between February 28 and August 31 of this year. Customers can apply this deal to up to five machines, but no more than that. As far as I know, this deal is only available in the United States and Canada, but obviously, customers all over the world should ask for the same treatment. And IBM similarly says that the transfer fee forgiveness only applies to machines moving in the same software tier as described by the guide above (not the IBM i software groups P05 through P60, which are different characterizations), but I think that anyone moving up to a higher group should at least ask for those $17,000 or $18,000 fees to be knocked down by $5,000 or abolished completely.

One more thing: Last May, when a similar IBM i license transfer deal was announced for Power S824 machines, IBM also waived the After License fee charges on Software Maintenance for customers who had let their support contracts lapse. Software Maintenance costs about 25 percent of the operating system licensing fees and is charged on an annual basis, and the After License charges can be in excess of a years worth of Software Maintenance fees, depending on how long it has lapsed. This can also be a large number, and if IBM wants customers with older machines to move ahead, then it is probably wise to offer this deal again. IBM has not done so here in early 2017, but nothing prevents customers upgrading to Power8 machines of any type from older gear to ask.

Ask and ye might receive.

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Tags: Tags: IBM i, Power S812, Power Systems

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IBM i License Transfer Deal Comes To The Power S812 Mini - IT Jungle