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IBM doubles Power Rewards to chase Sun gear

Big Blue can't discount like in the old days

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After having snubbed Sun Microsystems last month, leaving it to be acquired by database and application software powerhouse Oracle for $5.6bn, IBM wants to do its best to make sure that the Sun that Oracle gets perhaps by summer is as weak as possible. And hence, it is ratcheting up the marketing pressure.

Today, IBM announced that it is doubling up the points that UltraSparc and Sparc64 shops can earn under the Power Rewards deal to $8,000 per processor core (assuming that a point in the program is worth a dollar, which it is).

For many Sun and Fujitsu customers, the trade-in points, which are good for the purchase of various IBM hardware, software, and services, are now considerably higher than the purchase price of entry Sparc gear, and for many more, that is a lot more than the current street value of their gear they have in their shops if they bought it on the second-hand market.

That $8,000 per core, which is called the Sun Set Special, is a lot more money that Big Blue was offering to Sparc customers a year ago, when it set the points at a measly $1,000 per core with a Sun or Fujitsu label when it debuted the converged Power Systems server line based on Power6 processors, finally merging its System i proprietary and System p AIX and Linux servers.

At the time, IBM was keen on chasing Hewlett-Packard's installed base of PA-RISC servers running HP-UX Unix, mainly because the PA-RISC boxes were soon to lose support and customers were - and many still are a year later - facing a recompile of their applications if they decide to move to Itanium-based Integrity servers running HP-UX. And therefore, PA-RISC cores were assessed at $4,000 per core compared to $1,000 per core for Sparc, Itanium, Alpha, and MIPS used cores in various server lines.

IBM estimated that there were 175,000 HP-9000 boxes out there with PA-RISC chips, still doing work, a year ago when the Power Rewards program was announced, and I estimate that somewhere around 175 conversions of HP iron to Power iron have been done in the past year. That may not seem like a lot, but these deals range between hundreds of thousands of dollars to millions of dollars, and they yield money every year through maintenance, upgrades, and other services.

Last November, when Sun's financials ran aground (and HP's didn't) and when it became clear that customers were starting to get jumpy about the future of Sun's "Rock" UltraSparc-RK processors and their "Supernova" systems, IBM jacked up the Power Rewards to $4,000 per core on Sun and Fujitsu Sparc boxes. And this February, IBM offered Power Rewards to companies swapping out x86 and x64 servers made by HP, Dell, Sun, and other who consolidate workloads onto Power iron $500 per core. (Customers who want to consolidate from System x or BladeCenter x86 and x64 servers made by IBM are not allow to participate in Power Rewards, officially anyway, and I am sure an IBM sales rep can have an arm twist to change that.)

The one interesting thing on this deal is that companies running IBM's proprietary OS/400, i5/OS and i operating system (the name change connotes recent release levels, not substantially different functionality) are able to get Power Rewards credits if they move to Power-based blade servers and consolidate workloads running on non-IBM x86 and x64 rack and tower servers onto x64-based blade servers made by IBM.

Depending on the deal, the Power Rewards program can cut the cost of doing a migration in half, according to IBM's calculations. Full details of the offer are here.

The Sun Set Special only runs through June 30, the end of Sun's fiscal 2009 year and not expected to be a very good one for Sun. Customers can buy Power 520, 550, 560, 570, and 595 machines (which use a mix of Power6 and Power6+ processors these days) or older System p 590 and 595 or System i 595 servers (which are based on older Power5+ processors) as part of the Power Rewards deal. While the deal is not restricted to AIX, it is far more likely that customers using Sun or HP boxes will be on Unix and will want to move to AIX; but i 6.1 and Linux are acceptable target platforms if customers want to go that way.

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