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The IBM mainframe may not have a lot of direct competition when it comes to z/OS-based batch and transactional work, but the story is different when it comes to Linux. There's plenty of competition among Linux platforms, and Big Blue can't ignore the pressure that Moore's Law brings to bear.

So IBM is slashing the prices it charges for its System z mainframe engines that are set up to exclusively run Linux, the so-called Integrated Facility for Linux speciality engines. These are sold at much lower prices than standard mainframe engines, just like other speciality engines designed to accelerate WebSphere middleware (zAAPs) and DB2 database routines (zIIPs).

Alternatively there is the System z Business Class, a midrange box that uses three-core z6 chips that presumably run at a lower clock speed, and that have from one to five engines for z/OS workloads and up to ten IFLs for running Linux images atop of the z/VM hypervisor. Last fall, when the System z BC machines were launched, IBM cut the price of IFLs by 40 per cent, from $125,000 per engine to $75,000. Because the System z BC machines were aimed at smaller shops, and used engines with less oomph, IBM charged only $90,000 for IFLs on these smaller boxes.

Now, IBM has cut the price of IFLs on the System BC machines to $47,500 a pop, a 47.2 per cent price cut that is directly attributable to the increasing core counts and performance for x64 servers and the increasing sophistication of hypervisors on x64 iron, which allows many Linux images to be crammed onto a single machine, much as the combination of z/VM and IFLs allows dozens to hundreds to thousands of Linux images to be put on a System z mainframe.

"The price change is in part because of the increased performance with the latest Nehalem EP Xeons," says Karl Freund, vice president of System z strategy and marketing at IBM, adding that the price change on the BC mainframe boxes is also aimed at blunting the announcement by Intel of eight-core "Nehalem EX" Xeon 7500s at the end of this year.

The Nehalem processors, with their QuickPath Interconnect, are able to support many more virtual machines, thanks to better virtualization electronics and much higher memory bandwidth. While expensive, mainframes offer established virtualization, as well as high memory and I/O bandwidth. This is a must for machines that have to run at somewhere north of 95 per cent utilization to make them economically feasible.

Because IBM is not ready to revamp its System z mainframes with eight-core processors (but probably will sometime around the launch of eight-core Power7 processors next year), it has little choice but to compete with better and faster and more capacious x64 iron from both Intel and Advanced Micro Devices on price.

Because IBM doesn't provide pricing on mainframe systems (including processors, memory, storage, and other necessary peripherals) or for its z/VM hypervisor, it is tough to reckon how to compare the IFLs inside the System z EC and BC machines. But you can isolate the per-engine costs easily enough and work backwards to see how many x64 cores the mainframe engine prices imply they can cover when running Linux workloads. Let's just talk about the five-engine System z 2098-z05, the top end BC box, just to get a feel for it.

This machine offers five z6 engines running at what I would guess to be 3.2 GHz, based on the 2,760 MIPS rating for the box, and according to mainframe watcher Technology News, has a list price of $2.55 million when configured to run z/OS. A base box with hardly no MIPS and memory costs $97,500, so activating the five engines in the box as IFLs would add another $237,500. Then you have to take off another $11,796 for the base 26 MIPS of z/OS capacity that was in the entry configuration.

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