Analysis: Big Iron, Big Cost? Big Blue Says No

IBM's new System z Solution Edition blitz may boost mainframe market share, but IT must weigh a lower total cost of ownership with upfront costs.

It sometimes seems as if IBM Corp. is fighting a losing battle on the mainframe pricing front. Although Big Blue likes to tout System z's lower overall total cost of ownership (TCO), its competitors prefer to shift the focus to Big Iron's considerable upfront cost -- what analysts like to call its total cost of acquisition, or TCA. From that viewpoint, the mainframe is a much more expensive proposition -- at least relative to less costly Unix, Linux, and Windows systems.

IBM has countered this messaging with only moderate success. It offers customers a number of TCA-softening concessions -- including deep discounts, flexible leasing or financing terms, an MSU capacity dividend that it says can help offset the cost of hardware upgrades, and a range of low-cost specialty processor engines -- but it hasn't been able to completely parry the TCA-centric messaging of competitors such as Hewlett-Packard Co. and Oracle Corp. (née Sun Microsystems Inc.).

With last week's announcement of seven new System z "Solution Edition" bundles, Big Blue took yet another swipe at the mainframe pricing issue. Whether its latest efforts will be any more successful than various other market-seeding or cost-cutting efforts -- such as the introduction of a low-price, Linux-only "baby" mainframe (the z800) or the development of a "lite" version of z/OS (z/OS.e) -- is open to debate.

Industry veteran Joe Clabby, a principal with Clabby Analytics, likes what he sees in the new bundles, which target six distinct technology domains or software packages: data warehousing, or DW; application development; disaster recovery; security; SOA; and ACI (for electronic payments). The seventh entry in Big Blue's Solution Edition effort is actually a kind of retrograde deliverable: namely, the SAP-oriented System z bundle Big Blue introduced almost two years ago. What's more, Clabby notes, IBM also cut the price of its Integrated Facility for Linux, or IFL, for users of its System z10 Enterprise Class (EC) mainframes.

The salient point, according to Clabby, is that IBM's new System z Solution Edition bundles don't just offer prefab hardware, software, services, and pricing; in addition -- and similar to Big Blue's stable of specialty processor engines -- the new bundles are designed to cultivate (or encourage the adoption of) new workloads.

The DW bundle, for example, proposes to recast System z as a cost-effective platform for both data warehousing and business intelligence; in this regard it's similar to the zSeries Integrated Information Processor (zIIP) that IBM announced more than three years ago. The Solution Edition for Application Development, on the other hand, is designed to accelerate the development and deployment of new workloads for System z.

The DR offering, conversely, promises to make Parallel Sysplex-based disaster recovery a more affordable proposition.

A Smart Move

Clabby sees IBM's Solution Edition blitz as a savvy, if not spectacular, move, in that it helps counter the TCA messaging to which the mainframe has been particularly vulnerable.

"The beauty of these Solution Editions is that IBM has reduced all IBM stack costs [i.e., HW, SW, and HW maintenance] … to be competitive with Unix TCA," he writes, noting that in addition to slashing the cost of an IFL for its System z10 EC mainframes, IBM also announced memory price cuts for System z New Application Licensing Charges (zNALC) -- down to $2,250 per GB.

"In other words, these Solution Editions and pricing actions help lower TCA -- closing the gap between mainframes and distributed servers -- and thus taking the steam out of the argument that mainframes cost too much."

Most of the Solution Editions address real or potential market needs. One possible exception, Clabby says, is the System z Solution Edition for Application Development: comparatively few shops have standardized on System z as the locus of (or primary platform for) application development, he points out. He points out, however, that Big Blue has been able to produce at least one testimonial from a customer that's doing just that. In addition to the DW bundle, Clabby is particularly high on the DR and Security Solution Editions.

"The Solution Edition for Security … builds on a key IBM theme introduced a few years ago -- [i.e.] the mainframe positioned as a centralized security clearinghouse. With the industry's highest security rating [viz., EAL level 5], it makes good sense to position the mainframe as a centralized security hub," he comments, noting that -- for all of its security bona-fides -- customers haven't been quick to embrace Big Iron in this fashion. The new System z Solution Edition for Security could change that.

"Part of the reason … is that it is complex to configure such a hub and this new solution set should go a long way toward fixing this challenge." Ditto for the System z Solution Edition for GDPS, which "with its considerably lower TCA … should be attractive for enterprises looking to ensure business continuance in case of a catastrophic failure."

Vince Re, chief architect of CA Inc.'s mainframe practice, is also high on the new Solution Edition deliverables. He sees them as of a piece with IBM's efforts (as well as those of other mainframe-oriented vendors) on the Big Iron TCO front -- with a subtle distinction.

Far from losing the mainframe TCO/TCA messaging war, Re argues, Big Blue has been winning -- at least with respect to the mainframe's price/performance bona-fides -- even when its putatively higher TCA is taken into account. He cites last year's 27 percent uptick in MIPS shipments as well as Big Iron's clear growth in the $250,000 and over segment as just two compelling points in this regard.

"Any initiative that drives new workloads on the mainframe is definitely good for the whole ecosystem, including CA," he says. "If you take a hard look at what [customers are] doing with their mainframes, the price performance on both the hardware and the software has moved so much in the last decade that that isn't an issue anymore."

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