ICRIER whines about System z price cuts

Usually this blog criticizes IBM for pricing the System z too high.  Now, when IBM finally starts to (selectively) lower the mainframe cost of acquisition, mainly through the System z Solution Edition program, researchers in India are whining about IBM’s z predatory pricing.

A long (110 page) report on high end servers by the Indian Council for Research on International Economic Relations (ICRIER) titled The Issues of Competition in Mainframe and Associated Services in India   notes that India doesn’t have very many mainframes (25 according to their count) but it still manages to complain extensively about IBM pricing policies. System z prices are too high—no surprise there—but IBM’s discounting strategy, in the researchers’ eyes, seems predatory and will lead to vendor lock-in.

eWeek, among others, picked up on the ICRIER report.  As eWeek reported, IBM’s response was to question the credibility of the study, sponsored by Opemainframe.org, which is underwritten by Microsoft. However, the group also is supported by TurboHercules and others that offer mainframe tools not endorsed by IBM.   

The report’s biggest charge is that z/OS locks customers into the mainframe and calls for IBM to separate the hardware platform from the operating system, an old complaint and somewhat hypocritical. ICRIER and Microsoft do not seem concerned that Apple bundles the Mac OS with the underlying hardware, charges customers premium prices, and locks them in too. (a modest suggestion–unbundling Apple might prove an even bigger opportunity for Microsoft)

Even Linux on z, according to the researchers, fuels vendor lock-in although exactly how is not clear. Sure, Linux on z is not transparently portable, requiring more than a simple recompile. However, we’re not exactly talking about going from the z/OS to Windows. Linux on z to Linux on another platform is quite doable.

Toward the end of the report, the researchers list a dozen high end server sales in India by both IBM and HP.  The System z prices ranged from $450,000 to $1.3 million. Pricey for sure except the HP servers don’t come cheap either, $288,000 for a Superdome running Linux up to $1.9 million for a Superdome running HP-UX. Of course, the devil lies in the configuration details, but in no case were these cheap Windows servers from Best Buy or Staples.

By the end of the report, the researchers seem to have talked themselves out of their initial charges: “What this [the growing popularity of Linux and WebSphere on the z] implies is that the dangers of lock-in to the proprietary standard z/OS are likely to be low in India.” Not willing to drop it completely, they add: “our survey, however, does reveal that the mainframe is an expensive system compared to others, albeit also one with a perception of higher quality.”

As the researchers noted, Linux and WebSphere make the mainframe more flexible and accommodating—and they haven’t even considered by what the next System z, the hybrid z, might bring in terms of multi-platform capabilities. They also noted that Linux, in the form of the System z Solution Edition Enterprise Linux Server makes the z quite competitive in price. Even the prices the researchers list show the z more than competitive. Then consider the higher perceived quality. So, what’s their beef?

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