To that end, IBM is always wheeling and dealing informally in contested accounts, but the pSeries channel and IBM’s own sales force sometimes needs some goodies to throw into the market basket.

To that end, IBM has announced a smorgasbord of deals affecting its Power-based pSeries AIX-Linux servers and its OpenPower Linux servers. Some of the deals are quite complex, some are simple, but they all have one thing in common: They all make it a little cheaper to buy a Unix server now rather than wait until later to do it. The reason why IBM is putting out deals now is simple.

In 2004’s second quarter (ended June 30), the pSeries was in the middle of the transition from Power4 chips to Power5 chips, and sales actually declined in the pSeries line by 3%.

This decline was driven mostly by a slowdown in sales of entry and midrange pSeries machines as customers were anticipating new p5 gear, which was indeed launched in the third quarter. High-end pSeries sales did alright in last year’s second quarter, since IBM was not expected to debut the high-end p5 590 and 595 servers until the end of the year. So in many ways, that 36% growth that IBM attained in the second quarter of 2005 was again a relatively easy compare.

As IBM is working the third quarter, it has a relatively easy compare again, since 2004’s third quarter only saw pSeries sales rise by 1% as the p5 transition was still underway at that time; sales of pSeries iron was up 9% in the third quarter of 2004 in the Americas region and up 8% in Asia/Pacific, but was off 17% in Europe.

So once again, Big Blue has a relatively easy compare in the Unix business for the third quarter of 2005, and showing revenue growth should be relatively easy. Then again, IT sales executives are usually judged by their current quarter and what their prospects are for the next quarter. So IBM cannot afford to rest on its laurels.

To try to close some upgrade deals in the third quarter of this year, IBM has announced a Power4 to Power5 trade-in promotion on high-end pSeries servers that expires on September 23. Rather than try to get customers to do a formal upgrade–meaning IBM engineers come in and swap out some Power4 components in the customer’s server frame for new Power5 components–IBM is trying to get customers to do a box swap, which is easier for everyone involved.

Customers get a whole new machine, move their data and applications over, and IBM gets the old machine. To get customers to do the pSeries box swap, IBM is offering trade-in credits, which can be used for acquiring other IBM goods and services. The beauty of such a deal is that IBM gets to book a much bigger sale (upgrades are not the net-cost difference between Power4 and Power5 machines, but are akin to that) and it gets to keep all of the money from the sale because rather than give a discount, IBM is giving away trade-in credits. Some other part of IBM can take the revenue hit from the trade-in, not just the pSeries.

The way this deal works, if you have a Power4-based pSeries 670 or 690 server and a rack to house it, IBM gives you the trade-in credit if you acquire a new p5 590 or 595 server. To sweeten the deal, IBM will offer customers some free processor activations (which are worth several thousands of dollars a pop) in the new box. (This is a bit like selling your future server sales at a steep discount, since customers who get all of this extra capacity now may not need to buy more next year or the year after.)

The deal is complex in that you have to have a certain number of processors in the pSeries 670 or 690 box and you have to acquire a specific number of engines in the new p5 590 or 595 box. I’ll give you a few examples to bracket it. If you have a pSeries 670 with eight 1.1GHz Power4 cores activated, you can move a p5 590 with a 16-processor book with eight 1.65GHz processors on that book activated and get a $40,500 trade-in credit plus four extra processors activated, which are worth $30,800.

On a bigger deal, you can obviously get a bigger trade-in credit, but you spend a lot more cash, too. For instance, if you have a pSeries 690 with a base processor book with eight 1.9GHz Power4+ processors active plus three more books with half of the same 1.9GHz cores activated on each (for a total of 20 active cores out of a maximum of 32), you can ditch that machine and buy a new p5 595 with two 16-processor books installed, activate 32 of the processors, and IBM will toss in 16 more free processors (worth $512,000) and IBM will give you a trade-in credit of $270,000.

This deal only makes sense if it offers a comparable price to IBM’s upgrade charges and if the values of pSeries 6XX servers have plummeted in the wake of the p5s. The p5 machines have better logical partitioning and other features, but for generic AIX workloads, they have not truly made the Power4-based servers obsolete. IBM will do that in November, when it withdraws the Power-4 based pSeries machines from marketing.

IBM also this week cut the prices on its prior generation of Power4+ processors used in the pSeries 610 entry and pSeries 630 midrange machines. The price of a single 1.2GHz Power4+ core for these machines was chopped by 22.7% to $5,525, while that of a single 1.45GHz Power4+ core was cut 46.8% to $5,270. (Yes, IBM is charging more for a slower processor.)

IBM also took a knife to the prices for so-called Express configurations of these machines, which include memory, disk, and other features in a set configuration that is sold by IBM and channel partners pretty much as is. IBM cut the Express configuration prices by between 42 and 72%, and is clearly just trying to get these machines out of the barn.

IBM has a bunch of other rebates as well. Customers who buy 20 OpenPower 710 Power5-based servers for Linux or 10 OpenPower 720 servers can get a $5,000 rebate. The OpenPower 710 server has either 1 or 2 1.65GHz Power5 cores, while the OpenPower 720 comes with 2 cores and can expand up to 4 cores.

IBM is also offering a $2,800 rebate on an OpenPower 720 Express configuration, which has four 1.65GHz cores activated, 8GB of main memory, and four 73GB disks and which lists for $26,735 and sells on the street for about $24,000. IBM’s rebate on the OpenPower 720 Express machine does nothing more than make the IBM price the street price.

Further on the OpenPower front, IBM has an extremely convoluted deal that allows customers who buy one or more p5 570, 590, or 595 servers and one or more OpenPower 710 or 720 Express configurations a bunch of rebates. Rather than just make it simple, this deal gives maximum rebates possible for a given quantity of each server acquired and then asks customers and salespeople to compare the rebate from the p5 to the rebate from the OpenPower box and then make sure the rebates don’t go over some threshold I do not understand.

I read this deal a dozen times, and it still doesn’t make sense to me. If I were an IBM customer, I would make IBM give me the rebates shown in the deal for each machine I acquired, which is a lot more money than I think IBM is talking about. But as I say, it is hard to tell.

The AIX-based JS20 blade servers for IBM’s BladeCenter chassis are not exempt from the wheeling and dealing. Customers who buy a BladeCenter chassis and 14 JS20 blades (that’s a full chassis) can get a $3,500 rebate; those buying the NEBS-compliant BladeCenter T chassis and blades can get the $3,500 rebate if they only buy eight of the JS20 blades.

To sweeten the deal for AIX on the JS20s, which use IBM’s PowerPC 970 processors, IBM is also giving a rebate of $350 on the AIX 5L V5.2 or AIX V5.3 license for each blade. In January, IBM cut AIX prices on two-way, Power-based servers (including the p5s, i5s, and JS20s) to $150 per core, down from $385 per core. So, basically, IBM is paying customers to take AIX on the JS20s rather than buy Linux for Power on them from Red Hat or Novell.