IBM takes steps to relieve iSeries pricing pain

IBM is set to roll out new hardware, pricing and upgrade options for users of its iSeries systems as part of a $US500 million effort to revitalize the 25-year-old mid-range server line.

The overhaul was aimed at addressing several long-standing user concerns while also making the iSeries machines more appealing to first-time buyers, said Al Zollar, head of the iSeries business unit at IBM. IBM also planned to invest more in marketing in an attempt to boost interest in the iSeries technology among software vendors and resellers.

Perhaps the most important development, according to users and analysts, is a change in the way IBM charges users that run host-based green-screen applications on machines in the iSeries line, which was previously known as the AS/400.

Under IBM's new Enterprise Edition pricing model, companies will be charged flat fees, varying by model, that let them use the full capacity of their machines for running 5250 terminal sessions.

The approach replaces a complex and very unpopular pricing scheme under which IBM charged iSeries users an "interactive workload" fee for running 5250 applications. The multi-tiered pricing structure ensured that users paid progressively higher fees with almost every increase of their interactive workloads.

Along with the pricing changes, IBM will announce four new iSeries models, including a pair of systems that are based on its Power4 processor and will join the i890 at the high end of the server line.

Although iSeries systems still enjoy immense popularity among existing users, analysts said IBM hadn't been able to make much headway in attracting new users or application workloads to the platform.

IBM estimated that there were more than 400,000 systems installed worldwide, most dating back to the line's AS/400 days.

Gartner's analyst, Thomas Bittman, said in 1997, about 20 per cent of AS/400 revenue came from new business. Last year, that number was in the 2 per cent to 3 per cent range.

Zollar said that much of the drop-off in iSeries sales to new buyers had resulted from the increased popularity of Windows servers. Going forward, IBM planned to launch a much more vigorous marketing campaign in a bid to boost the profile of the iSeries line within its installed base and with users of other systems.

For instance, IBM would spend an additional $US20 million over the next two years to help resellers market the machines, Zollar said. Starting next quarter, it would also host more than 200 customer events worldwide to talk up the potential benefits of iSeries systems. On the technology front, IBM would continue to build on the ease-of-management and software-integration features that have been hallmarks of the iSeries line.