IBM smells Sun red ink

Undercuts Sparc servers with beefier rebates


Back in April, when IBM rolled out the completely refreshed Power Systems Power6-based server line, the marketeers also got a chance to play alongside the engineers with the launch of the Power Rewards rebate program. At the time, Hewlett-Packard's vintage HP 9000 server line seemed to be the main target of Power Rewards, which can cut the cost of a migration to an IBM Unix box by as much as 50 per cent over negotiated street price on the iron.

Now - as Sun Microsystems is struggling financially, is late getting its "Rock" systems to market, and is mothballing its own UltraSparc-IV machines - IBM thinks it's a good time to attack the Sun base.

The Power Rewards rebate program is part of something that IBM calls the Migration Factory, which is a set of server deals and technical expertise that helps customers running Solaris, HP-UX, Windows, or Linux platforms on iron that does not bear the IBM moniker to move over to Big Blue boxes. With the Power Rewards deal, IBM gives customers points for each PA-RISC or Sparc processor core they leave behind, points that are in turn used as company town money, redeemable for IBM goods and services or those provided by designated business partners.

Since 2001, when IBM got serious about the Unix business with the dual-core Power4 line of RS/6000 servers, the company has been getting progressively more aggressive about getting customers using Solaris, HP-UX, and Irix Unix or using proprietary platforms like OpenVMS and MPE to move to RS/6000, pSeries, System p, and now Power Systems iron. IBM bought Sector7, an HP migration specialist based in Austin, Texas, back in October 2003, to chase more deals.

Based on the methodologies developed at Sector7, IBM launched the Migration Factory service back in mid-2005, which aimed primarily at getting Solaris shops to move to IBM servers running Linux, but which has subsequently been expanded to cover migrations to AIX. To date, Migration Factory has done 1,200 customer migrations.

The Migration Factory does hundreds of assessments per year and generally takes down about 500 migration deals a year for IBM, according to Scott Handy, vice president of marketing and strategy for IBM's Power Systems division. And with the Power Rewards deal launched in April, this seems to be accelerating - and not to Sun's benefit.

In the third quarter ended in September, IBM did 135 deals, and the extra ten deals all came out of Sun's hide. Handy says that about 80 per cent of IBM's migrations come from Sun and HP Unix shops, and they have been evenly split to date. But there seems to be a little more interest in IBM's sales pitch these days at Sun shops. And that's why IBM has jacked up the Power Rewards points for each Sparc core to 4,000 each rather than the 1,000 each that was announced back in April when the program was launched.

Incidentally, PA-RISC cores were assessed at 4,000 points back then, while Itanium, Alpha, and MIPS cores were given only 1,000 points when customers ditched them.

Handy says that the point values on the platforms that customers are moving away from as they migrate to IBM iron have little to do with raw performance comparisons and more to do with IBM's desire to move customers and the likelihood of doing so by sweetening a deal. To take part in Power Rewards, customers have to buy a Power Systems 520, 550 560, 570, or 595 server to take part in the deal, and the older Power5+ System p5 590 and 595 and System i 595 servers can also be acquired under the deal.

IBM estimated back in April that there were 175,000 vintage HP 9000 machines still in use in the field, and thus far, these shops decided not to move to HP-UX v3 on HP's Itanium-based Integrity server line - after many years if being able to. In fact, around a fifth of HP's sales in its Business Critical Systems unit still comes from non-Itanium gear. "People are still buying PA-RISC when it is not offering good price/performance, and they are resisting the recompile to get to Itanium," explains Handy. "We figured if we put enough money on the table, they'd move." Either way, they are facing a recompile.

Next page: IBM smells red ink

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