IBM Lowers Price on Model 170

IBM celebrated the one-year anniversary of the AS/400 Model 170 with a 10-percent price break across the product line, the first price reduction since the Model 170 was introduced last February.

IBM also announced pricing for the two new processor points added to the line last month. The new low-end processor, the 2289, has a base price of $6,995, while the new high-end two-way processor, the 2388, has a base price of $105,000.

Those prices include the processor, operating system and base storage, but do not include tape drives and additional software such as Client Access or Query. Tim Schuetz, global AS/400 entry and multiples segment manager, says a typical configuration for the Model 170 with 2289 processor feature, would make the price about $10,000.

Schuetz says the new processor point is targeted toward customers looking to migrate from older boxes in advance of the Year 2000.

“We’ve introduced a newer processor at a significantly lower price. That’s by design,” he says. “It’s targeted at an older customer who needs to be moved from a System/36 or a very old AS/400 to be Year 2000 compatible. We’ve priced that product to do that kind of migration.”

Ten- percent price reductions take effect across the rest of the Model 170 line. The Model 170-2290 base configuration drops from $9,995 to $8,995, the 2291 from $16,000 to $13,500, the 2292 from $25,000 to $22,500, the 2385 from $50,000 to $45,000 and the 2386 from $70,000 to $63,000.

Schuetz says those price reductions are designed to make the Model 170 more competitive in the lower end of the enterprise server marketplace against PC servers.

“We want and need to be more aggressive in the marketplace with PC servers,” he says. “We’re not going head-to-head just based on a piece of hardware. But do they have a price set for the total value we provide? Look at that comparison.

“People are advertising PC servers that are just an Intel processor, a cabinet and a power supply.”

Schuetz says the Model 170 has been a very successful server so far for IBM. He notes that the upgrade made to the product last September, which included the addition of the Northstar chip, produced the fastest move to a new model IBM’s AS/400 Division has ever had. Schuetz says he has been involved with the product since its inception on a whiteboard in Rochester, Minn.

“We looked at where we needed to be in the marketplace. I presented a number last year and we came very close to that in the first year, when nobody in the room believed we could. We had the highest customer acceptance rate for a single model ever. We made it easy for people to buy an AS/400 that offers a lot of growth [within one model] and we made it much easier for our business partners to sell the box, rather than try to explain four different models to their customers,” Schuetz says.

“We had a very successful year, we did exactly what we wanted to do. Now we have a very aggressive plan for this year. We look for the 170 to continue to be a very strong part of our family and a real alternative to a PC server.”

David Andrews, managing partner of the Cheshire, Conn.-based D.H. Andrews Group, describes the Model 170 as “by far, the best price-performance deal out there.”

“It’s a great deal that keeps getting better,” Andrews says. “Last September, it got the Northstar chip, more disk and disk compression, and with all those factors it became a very attractive product. We recommend to our clients to see if they can fit into a 170. It’s a good deal.”