NEON’s zPrime lowers the cost of mainframe computing

There is no small amount of FUD being thrown around the issue of NEON’s zPrime and the System z.  No doubt IBM and mainframe ISVs are unhappy. Mainframe customers, however, stand to save a lot of money.

At this point NEON, a System z ISV, finds itself countering IBM scare tactics, which target mainframe customers and suggest that the use of zPrime will somehow violate their IBM licenses. IBM, however, “has provided no specifics about any violations,” said NEON CEO Lacy Edwards in a recent phone call, adding “we’ve had lawyers from 200 customers review their IBM agreements and found no problem.”

zPrime is a technology that allows a mainframe customer to run almost any application on a zAAP or zIIP specialty processor. It can be used with all the core mainframe workhorse applications; IMS, DB2, CICS, even batch workloads. The product enables companies to shift these workloads to the two specialty processors, which reduces the workload on the general processors and typically result in substantial software licensing savings.

Since June, zPrime is under evaluation by 200 companies. NEON allows companies to put it into production before they buy it. Currently, 15 companies are evaluating the software in production.

zPrime is licensed based on MIPS like conventional mainframe software. For smaller shops (2000 MIPS) the cost would run about $300,000 annually. A large shop (100,000 MIPS) could pay as much as $5 million. Of course, as with everything having to do with IT, especially in this economy, prices are always negotiable.

For the System z customer the savings come from reduced charges for software running on specialty processors and from reductions in IBM’s licensing costs. Additional savings come if the increased use of the specialty processors eliminates the need to upgrade the system. In fact, depending on the applications and workloads, some customers may be able to drop down to a lower level of MIPS.

“We have one customer evaluating zPrime, a credit card processor with 30,000 MIPS, who estimates as much as $30 million each year in savings,” Lacy reported. Until independent IT analysts like me get a chance to speak directly to zPrime users, there is no way to validate the reported savings. Given industry mainframe software and hardware licensing practices and prices, however, reports of big savings seem feasible.

The winners and losers around zPrime are obvious: IBM and, to a lesser extent, mainframe ISVs no doubt stand to lose revenue. Customers, however, win big, bringing the cost of mainframe computing down to more manageable levels.

The mainframe is overpriced, and IBM knows it. That is why the company is doing everything it can to lower the cost of System z computing short of simply slashing prices outright. The latest attempt is the new Solutions Edition program. Similarly, IBM’s Open Infrastructure Offering (OIO) gives customers a way to aggregate various buys to get lower prices. Heck, the company has even offered IFLs (which don’t work with zPrime) at half price.

IBM has done very good things with the System z to revive mainframe computing and make it almost truly competitive. If products like zPrime can drive down the cost of mainframe computing further and can stop companies from abandoning the mainframe for distributed systems running the latest Intel multi-core processors or maybe even attract new customers and new workloads to the z, NEON will be doing  IBM and everybody else a favor.

2 Responses to “NEON’s zPrime lowers the cost of mainframe computing”

  1. The Guy Says:

    The mainframe as well as the AS/400 today is pretty much an over priced PowerPC base rig.

  2. zPrime battle extends to z196 « DancingDinosaur Says:

    […] This is a long-running soap opera. Will IBM and NEON settle? Will IBM simply buy NEON and bury the technology? Will IBM just bleed NEON to death with legal expenses? DancingDinosaur has been covering this since November 2009. […]

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