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IBM chases HP (and Sun) with tiny mem prices

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In an effort to boost the amount of money that IBM is getting from competitive takeouts of Unix systems from Hewlett-Packard and Sun Microsystems, Big Blue has taken a sharp machete to the memory prices on its Power Systems, reducing prices by between 28 and 70 per cent.

The Power Systems line of servers is based on IBM's homegrown Power6 and Power6+ processors, but the DDR2 main memory used in the machines is a bit pricey. So costly, it turns out, that high memory prices can keep customers who are willing to migrate from HP-UX on PA-RISC or Itanium servers from HP or Solaris on Sparc servers from Sun or Fujitsu to AIX-based boxes from moving as many workloads as they would like over to virtualized Power boxes.

"It's a pretty radical price action," says Scott Handy, vice president of marketing and strategy for the Power Systems division within IBM's Systems and Technology Group. And the reason, Handy explains, is that the company wants to finish out 2009 with a record-breaking amount of HP and Sun server takeout revenues. In 2006, 2007, and 2008, according to Handy, IBM did approximately $500m a year in takeouts of these competitors and put customers' workloads on AIX machines as part of the deals.

As El Reg previously reported, IBM's chief financial officer, Mark Loughridge, was boasting last month that the company had done $400m of competitive Unix takeouts in the first three quarters. So maybe IBM was on track to do something on the order of $540m to $550m in takeout biz in the fourth quarter. "I checked it with enough geographies and with enough deals that I was convinced that this was the next way to put the pedal to the metal," said Handy.

While IBM will not admit this, the advent of much faster DDR3 memory, used with the "Nehalem" family of processors from Intel and soon to be used with the "Magny-Cours" and "Lisbon" family of chips, due to hit the market in volume in the second quarter of next year, has made the DDR2 memory used in Power Systems look a bit long in the tooth.

In the midrange, IBM has to make Power Systems running PowerVM look attractive compared to x64 machines running VMware's ESX Server 4.0 hypervisor. It will be many, many months before IBM has Power7 machines and their DDR3 memory into the field, and the company has to do something to compete with Linux on x64, which is trying to compete with Unix on RISC iron too.

In August 2008, in an effort to boost the usage of its PowerVM virtualization hypervisor for its Power Systems line, IBM cut memory prices on Power6-based servers (Power6+ machines were not out yet) by between 26 and 50 percent. The price cuts were deepest on midrange boxes and petered out on larger boxes, and varied all over the place.

This time around, IBM is trying to keep it simple. On entry Power 520 (up to four cores) and midrange Power 550 and 560 boxes (up to 8 or 16 cores) using 1 GB, 2 GB, or 4 GB DDR2 modules had a 28 per cent reduction in price, to 25 cents per MB regardless of capacity. (Generally, lower-capacity modules cost less than fatter ones, so this is an interesting decision).

The price of 8 GB modules, which are available only the Power 560, has been cut by 70 per cent, to 40 cents per MB. That is the same price per MB that IBM is now charging on 1 GB, 2 GB, 4 GB, and 8 GB modules on its high-end Power 570 and 595 boxes. On the Power 595, a 256 GB feature card with all of its memory activated had its price chopped by 50 per cent to $1.05 per MB. This card is only used for the biggest Power6 boxes that require more than 2 TB of main memory.

This price change is not a promotion, but rather a permanent change. IBM has not cut prices on memory for its Power-based J series of blade servers, by the way. IBM has not - and does not seem inclined to - cut prices for Power processor core activations on the machines.

While IBM has aimed this promotion at reducing the cost of AIX boxes suitable for supporting many consolidated HP-UX and Solaris workloads, IBM's proprietary i/OS customers and Linux-on-Power shops benefit from IBM's aggression in the Unix racket. ®

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