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Power7 chips going for a song in Big Blue January sale

Getting rid of inventory?

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Power Systems, the line of big iron packing Power7 CPUs, was one of the bright spots in IBM's server business in the fourth quarter - so a price cut on Power7 processor cards and processor core activations might be one of the last things you would expect out of Big Blue. But this week, that is precisely what the company did.

IBM has dozens of different SKUs for processor options across its servers, and the price cuts (which range from 20 to 30 per cent off the prior list prices) only apply to six different cards used in three of the Power Systems lineup. If El Reg had to guess, and we do because IT vendors very rarely explain why they do what they do, we would say that IBM has some specific processor cards building up in the barn and it wants to get rid of them before the dust gets too deep on them.

This is how IBM sells Power-based machines: you pay for a card with a specific processor that has a base price and then you pay to activate each core on that processor. IBM's Power7 chips come in speeds ranging from 3GHz to 4.1GHz and with 4, 6, or 8 cores activated.

On the entry Power 710 server, one card based on the eight-core Power7 chip running at 3.55GHz got a 30 per cent price chop on both the base card and the core activations. The card now costs $1,750 and each core costs $1,152 to turn on. (Yes, that is a lot more expensive than a Xeon or Opteron processor. Welcome to the proprietary Unix server business.)

On the Power 740 rack server, which has a lot more memory and IO expansion, a processor card with the same eight-core 3.55GHz processor card now costs $3,339 after a 20 per cent haircut, and each core activation got the same trim and now costs $2,212.

As you can see in IBM's announcement letter, four processor cards used in the midrange Power 750 server and their core activations also got a 30 per cent chop. An eight-core 3.6GHz Power7 processor card now costs $12,390 and core activations cost $6,300. A card with one six-core 3.7GHz processor now costs $4,900 and core activations cost $3,395, while a card with four cores that can spin at 3.7GHz costs $3,017 and core activations cost $3,250. Finally, an eight-core Power7 processor card costs $4,158 and activating a core costs $2,170.

IBM did not make an official price cut across the whole Power7 product line, but as with all server vendors, the list price is a ceiling from which to start negotiating, not a street price. Many Power Systems shops brag that they get much better discounts than this price cut anyway.

The thing to remember is that the price cuts don't apply to all Power7-based servers, but that doesn't mean you can't ask for the same price cut to start and then negotiate downwards from there. Even at these relatively high prices, which all RISC and Itanium server makers charge, the price they pay for the processors makes up a small portion of the overall cost of the system. At this point in the history of the computer business, memory, disk, and systems software make up a much larger portion of the server budget than processors anyway. ®

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