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back to article IBM Power Systems deals get stingier

Here we are in the tail end of the fourth quarter with questionable stats in the Western economies and very good growth in the emerging markets of China, India, Russia, Brazil, and a handful of other countries. With Power Systems revenue on the decline year-on-year – and against a pretty easy compare, mind you – you'd expect …

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Good Kit...expensive though

We have a good few hundred P Series (P5/P6) knocking around, mostly a Sun estate though. I do like IBM hardware, it's easily the best out there (coming from a "Sunshiner"). In terms of CPU development they have lead the pack for the last 7-8 years in my opinion and that is why they are where they are, they are also pretty much untouched in the RISC virtualization world too, VIO is damn impressive. AIX though....meh....no proper obp...meh...the ODM...the most stupid idea ever, give me my flat files and my path_to_inst any day. Hacking away at the ODM after a failed websphere install is bloody horrible.

Saying all that AIX is a perfectly capable and fine OS, just would't call it a great UNIX that's all, ain't no love for binary database's from me! It's something I have no issues with deploying though, and I reckon it would be deployed a hell of a lot more over the other *nix's if it was cheaper. In my opinion IBM has a vastly overinflated view of how much it's hardware is worth.....

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Coat

Old hw.

Jup we also have a sh*t lot of .. well old POWER crap here. I don't think there is more POWER2 SP stuff left, but I've seen a single PPC604e based machine in the HW inventory. And I am helping our DataCenter depardement getting rid of the last RS64 machines. That then leaves all to many POWER4's and a lot of POWER5 stuff.

Problem with the POWER5's is that there is no upgrade path to POWER7. So it's basically replacement there. Which is stupid as the POWER5->POWER6 upgrade really was a good one, as there were a lot of stuff that could be reused. Going from POWER6->POWER7 it's mostly Software licenses, cards and chasis that are reusable, so the savings aren't that big. But on the other hand, a new POWER7 770 fully loaded costs the same as a fully loaded POWER6 570.

// Jesper

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If you are doing trade-ins of power how for new power hw you aren't doing it right

Having done some analysis myself on how to do hardware lifecycle management... then I have to say if you are doing trade-in's of POWER hardware for POWER hardware then you aren't doing things right.

A good example is for example if you have a POWER6 based 4.2GHz POWER 570, rather than trading such a machine in, upgrade it. The upgrade path of a POWER6 based 4.2GHz POWER 570, is a POWER 770 with the 3.5GHz POWER7 chip with 6 cores.

It's much cheaper to upgrade and much easier also.

// Jesper

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Bronze badge
Paris Hilton

IBM loves being a high margin company...

They'ld rather let the product strangulate to death than run a low margin business. If I was an existing customer - I would be evaluating my exit strategy coz IBM is not gonna slash the prices, ever. If they appear to be doing it, they are gonna hike the support and service, coz the services arm paid the premium on customer's behalf and now they wanna recover it (all the while maintaining their margins).

Power7 might be a marvel of engineering - I would readily agree to that.. but buying IBM is penny wise pound foolish. It's not even Apple of the enterprise world. IBM is simply IBM and it will behave like IBM. (pardon the overzealous verbosity).

Paris, coz, well she is high maintenance.

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Boffin

Seriously?

Look, here's the bottom line.

Nobody but a nobody pays the list price for anything at IBM.

SMB markets tend to get at best 20-25% discount.

Larger companies get steep discounts based on what they buy from IBM.

The discounts are letter tiers. (J discount for the big boys.)

Then if you're really sharp, you get a discount off your discount. (Yes, you can play the IBM reps for even sweeter deals if you know how... ;-)

So when you get down to it. IBM's margins are that sweet. Especially for the big shops that buy the big expensive kit. (They have the larger discounts).

Posted anon because... well, I know too much. :-)

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Without competition

from HP and Oracle, IBM would have much much higher prices. Like the Mainframe business. The IBM Mainframe margins are sky high because there is hardly any competition.

Because of HP and Oracle, IBM has slashed prices of POWER7. IBM is not really interested about the low margin x86 market. They make their money from the high margin market.

This aggressive pricing from IBM, too low a price from IBM, shows that IBM was really afraid from competitition. Now, I should quote Jedi Master Yoda on Fear, but I dont remember any of his sayings.

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Anonymous Coward

Not so surprising they want to boost margins with new kit

Its relatively new so theyre not going to eat into margins this early in the lifecycle. Maybe there are also supply constraints at play - you never know.

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