More Insight into IBM's New z114

Rob Enderle's reaction to IBM's introduction of the new z114 mainframe is quite interesting and thought-provoking. In short, he notices that major IT vendors have flipped roles, with Oracle (and Microsoft, I would argue) now emulating IBM's worst behaviors from the 1980s, undermining trust among formerly loyal customers and partners. Enderle also observes something I reported in my reaction to the z114's introduction, that IBM is passing along its cost savings (and perhaps more than that) to its customers — clear evidence that IBM is focused like a laser on growing the mainframe ecosystem. Said another way, Sun customers are to be milked, and IBM customers (current and prospective) are to be delighted.

Another way IBM is delighting current and prospective mainframe customers is on the software side. As most people in IT purchasing know, software licensing and maintenance fees are increasing quickly, in general. I point to these key drivers:

1. Commercial software is a close substitute for labor. (You can either buy software or build it.) Given long-run global trends in labor and in business sophistication, we would expect commercial software to take a progressively bigger role in IT projects with correspondingly bigger shares of the project budgets.
2. There has been quite a bit of consolidation in the software industry generally. Less competition tends to result in higher prices. Interestingly, there has been increasing mainframe software diversity in recent years.
3. Virtualization tends to drive down the number of CPU cores required to perform the same work. Software vendors have been racing to claw back their licensing and maintenance fees as customers have virtualized their software products, most of which are licensed per core.
4. In some industries there's unexpected growth that's driving additional infrastructure expense (including software). For example, I'm hearing from a lot of banks that smartphones (such as Apple's iPhone) are driving up transaction volumes and infrastructure requirements.
5. As software becomes more sophisticated, new entrants face tougher challenges getting established. If there's less competitive threat from potential new entrants, then prices will tend to be higher.

That said, IBM is consistently driving down mainframe software unit costs, something that's quite rare or even unique in the industry. The z114 continues that evolution, with even more attractive software licensing terms. IBM dropped prices for z/OS and other mainframe-unique software products. You'll probably see a reduction in z/OS-related software charges ranging from 5% to 18% just by moving from a z10 BC to a z114. Interestingly, IBM's most aggressive z/OS pricing is for single z114 customers. Coincidentally my favorite mainframe configuration is the "single machine virtual cluster" Sysplex approach, and IBM's new pricing is especially friendly to that mainframe-unique, parsimonious way of delivering exceptional reliability and availability.

At the same time, IBM dropped its prices for its Linux-based software products. Pricing per core fell from 120 "value units" to 100, a decrease of almost 17% compared to the z10 BC. Core performance is up substantially, so that means IBM reduced unit prices roughly 29% (by my quick calculation) compared to the z10 BC.

There's no question this IBM behavior is customer-friendly, and it goes a long way toward explaining why IBM is enjoying such phenomenal mainframe growth. I hope more IT shops understand this stuff, and soon.

Source :  http://mainframe.typepad.com/