Price Increases on Upgrades to Take Effect March 1

Joanna Doyle

The price increase announced last month for AS/400 upgrades will not be implemented until March 1, an IBM spokesman told Midrange Systems Monday.

IBM informed its business partners December 1 that they would institute a price increase for all upgrades to the AS/400 700 series. The price changes were originally supposed to take effect Feb. 1, but have recently been postponed another month.

The increases will effect all upgrades to the 700 series and some within the 600 series. Drew Flaada, director of product management, told Midrange Systems in December that the pricing changes do amount to an actual rise in cost for customers who choose to upgrade after March 1, but they are not considered to be a price hike per se. Flaada compared the proposed rate adjustment to monthly revisions in the blue-book values car dealerships use to determine the value of a trade-in. The pricing changes reflect more the decrease in the value of the product being traded in, than an increase in the price of the AS/400 700 series, he said.

IBM regularly readjusts the value of older systems, either annually or when new hardware is introduced. Actual cost increase for customers “depends on where you’re coming from and where you’re going to,” according to Flaada. Value decreases on used products, and therefore increases in upgrade prices, will be more dramatic for upgrades from newer systems, because products lose the most value proportionally in the initial years after they are introduced.

Increases will be seen in Software Subscription prices, as well. The P05 pricing tier will be subject to a projected increase of 28 percent, the P10 tier will increase by 18 percent and the P20 through P50 tiers by five percent. Flaada said the price increase reflects the actual usage of the product by consumers as well as the increased number of products included in the package.