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New pricing snuffs the fluff

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IBM took a nice step this week to back up the marketing fluff behind its "On Demand" computing program with a new processor pricing system for its high end Unix servers.

Along with a faster Power4 chip, IBM has extended its pay as you go pricing model for the chips and will even let users test out the new purchasing model for free. This move helps show IBM can keep up with competitors such as Sun Microsystems and HP with new high end tools and gives a glimpse of what on demand computing may mean.

With its capacity-on-demand tool, users can purchase extra processor power in small increments to keep up with periods of high demand. On the high end p690 and p670 servers, users can pay to have four processors standing by. Customers can then activate the processors, two at a time, as needed and pay for the extra chips in 24-hour increments. IBM will typically let a customer turn on the chips for a certain number of days in a 60-day period.

IBM has also brought this feature down to the lower end p650 and will sell extra capacity two processors at a time. Users can ask for a 30-day free trial of the program on any of the servers.

IBM's pSeries Unix servers can detect processor failures as well and start up a redundant chip before the failing chip goes down.

HP and Sun have similar tools, and each vendor likes to claim they can do this kind of processor provisioning the best. Sun, for example, already lets users pull out or insert processor boards while a server is still running and can have CPUs of mixed speeds in the same server. IBM can't match that.

This type of feature points to a strong effort on the vendors' part to try and make their utility computing hype a reality. Despite their efforts, however, software makers hold the key with the technology in their pocket books. The ISVs have struggled to keep up with the systems companies and have not agreed upon a nice way to "per processor" price this type of offering.

"The current state of software licensing will make this arrangement much less flexible than it could otherwise be," wrote Illuminata's Gordon Haff and Kevin Fogarty in a must-read note. "As the number of processors goes up so, typically, does the license cost of the third-party software running on the system. Unfortunately, few ISVs are presently able - or, possibly, willing - to offer the kind of variable cost arrangement that IBM is offering.

"IBM's systems group is working with its middleware divisions to make its licensing as responsive to capacity on demand as its systems are. So for those that also run DB2 or WebSphere, say, some relief is in the wings. But, for the time being, customers will have to deal separately with their software providers on this issue."

HP is delivering a similar message. Nora Denzel, the impressive VP of software at HP, said the company points most customers to Oracle, BEA or whomever to try and work out the pricing details on things such as multicore processors.

"Software pricing is more of an art that a science," Denzel said in an interview. "If you have Oracle or Microsoft, the customers themselves have to deal with those issues, there are discussions happening to work this out."

It looks like the hardware vendors will drag the software crowd kicking and screaming to more modest pricing plans for utility-style computing offerings and for the multicore chips starting to arrive on the scene such as Power4.

Despite these problems, Illuminata reckons IBM is taking the right steps for its users. The analysts rank IBM ahead of Sun and just behind HP with their respective capacity-on-demand programs.

It's also good to see the Unix vendors continuing to advance their technology at a steady pace, while many financial analysts say the Unix folks are stuffed.

Unix servers are giving customers the easiest access to most of the early features present on the hardware vendors' utility computing roadmaps. In IBM's case, the Unix systems provide the best example that On Demand Computing actually means something.

Microsoft and the Linux makers have some work to do if they want to get with the program. ®

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