In last week's April 14 iSociety chat with IBM's Jim Herring and Ian Jarman, I posed the question: "What's up with the 40-user note on the 515? Is that an actual cap or a recommendation?"

Herring responded, "It's a cap, and it's based on the fact that most larger companies are going to want to have the advantages of expandability and upgradability of the 525."

Hmm . . . OK, sure, I'll buy that most companies would prefer to have the upgradability and expandability of the 525, especially companies that are predicting growth. Smaller companies, on the other hand, sometimes grow faster than they expect, and sometimes their profit margins and cash flow aren't quite as clear as those of larger businesses. So I posed an immediate follow-up question, something to the effect of:

"Why not let the 515 determine the number of users? Why not let the processor's ability to handle a business's use determine the cap? Is the problem that the 515 is too powerful, making this a profit issue for IBM?"

This question was ignored. No response.

Of course, there were many other questions in the chat, so maybe mine just got lost in the shuffle. In any event, I don't have any issues with IBM making business decisions based on profit. I hope those decisions are smart ones that benefit the System i ecosystem, though.

PC manufacturers have the ability to hobble their lower-end servers with processors that are less powerful than their top-of-the-line processors in addition to limiting RAM or putting them into enclosures that lack expansion features. The combination makes it easier to limit growth before the customer needs to add a new server. I suspect that IBM is between a rock and a hard place on the 515 because the company needs it to be able to scream in terms of performance but can't afford to let customers put too many users on it, you know, running multiple workloads instead of the typical one Wintel server, one workload model in many businesses.

So in some ways, I can understand the cap. Going into a new sale with less than 40 users, an IBM Business Partner is looking at a company that's large enough to consider a 515. With more than 40 users, the company should also be in a position to shell out the extra cost of a 525 for the benefit of being able to upgrade more easily and custom-configure the box. In both of these situations, I can see where a Business Partner could sell the System i to a customer who's interested in a lower total-cost-of-ownership solution and all the perks of the System i.

What happens, though, when you have an existing small System i customer looking to upgrade, say, from a 520 or older entry-level box? Jim Gardinier, below, has one answer for us:

From Jim Gardinier:

It just so happens I was in the middle of pricing a new 520 to replace an 800 at a remote site when the announcement occurred. The current system has been great for our current needs. The remote site uses only a small portion of the processing power. As I write this, there are 11 users signed on the system, and I can determine that four of the users are logged into the ERP system but are not actively working with the system. However, we are adding a GUI module to our ERP system that requires more processing power than our 300 batch / 25 interactive processor can accommodate.

My IBM business partner had provided two options :

1. A 1200 / 60 processor for approximately $48,000.
2. A processor with an accelerator card providing 600 - 3100 / 30 for approximately $38,000.

Given this info, I contacted my ERP provider to ascertain whether the GUI module was more batch or interactive loaded. For the record, the ERP module is batch loaded, which points to option 2 at $38,000. Then, the hardware rep informed me of the user pricing that had been announced that morning. This made the decision-making moot, and I would end up with more processor power than either of the above options for less money.

At first, I was elated. The 515 with a base price of $8,000 would be more than enough to meet our needs. But wait. . . . The remote site 800 has 45 users and another 20 remote users (I haven't seen pricing for the remote users). That puts me over the 40-user max of the 515. On to the 525 with a base price of $35,000. Add two 10-user packs for $5,000, and now I'm paying $2,000 more than I was paying for option 2 above, and we haven't added the pricing for the remote users or added communication ports that had already been configured into option 2.

This pricing scheme is like Ford saying it has special pricing for small families. I go to buy a small car for commuting to work, knowing that only one of my family members will travel with me at the same time. "But wait," Ford says. "You have a family of four. The small Ford and its pricing is limited to families of three or less. You can't buy a Ford — you need to go to the Lincoln dealer."

So once again IBM is taking me out of the Ford showroom and forcing me to buy a Lincoln.

I know IBM is going to say you're getting more processing power. Try explaining to your boss why you've just bought a Lincoln after he had just told another unit manager that he couldn't replace an employee who just left because the company needs to tighten its belt.

Why can't the pricing be concurrent user based? Given the fact that I will only have 15 users signed on at the busiest of times, I could buy for 20 users and have a cushion. The 515 would then cost me $12,000 and provide more processing power than I currently have. I could have the workers in each of the five shops share a user profile, but that would create a security and accountability nightmare. Or, I could put a limit on the number of active (signed-on) user profiles at 40 but not limit the number of actual user licenses. I would be more than happy to purchase the licenses for 50 individual users and be limited to 40 active users. The 515 would remain at the $20,000 level, which would be good for me. IBM would sell 10 extra licenses and keep the customer happy. Theoretically, IBM would be receiving more profit. There is no overhead on licenses, which would be good for IBM.

I have enough problems staving off Microsoft-minded managers. Now IBM pulls a stunt like this, and I have to tell these same managers that the machine will cost more than I originally quoted. Thanks for nothing, IBM! Instead of helping, you're throwing me into the arms (claws) of Microsoft!

P.S. After this one goes to Microsoft, my five other iSeries machines are sure to follow. Actually, when I first heard of the pricing, I was going to buy two more 515s to replace the obsolete iSeries machines scheduled to be consolidated this year. These two sites have less than 40 users and could take advantage of the pricing. It would allow me to spend more time on our ERP upgrades, but at this point I'd rather use an adding machine than throw more business to IBM.

Editor's Note: In a later e-mail, Jim made another point. In some areas of his business, he has seasonal workers joining the team. In a small business that has seasonal workers, a company could easily blow out the 40-user cap for a short period of time before settling back down to less than 40 users.

The new i-515 is a step in the right direction, but IBM still has far to go.

For the System i to succeed in the long run, we need to grow a new crop of System i people and a new crop of System i applications. Microsoft has a big advantage since almost everyone has a PC. Students in school and developers working at home all default to experiment on the machines they have and systems they can buy for a few thousand dollars.

The i5 with its hypervisor, i5/OS, Linux, and AIX environments offers a very attractive alternative if IBM just offered a system with a single-user license at the same price and power as a PC. It should have the console keyboard and display and mouse built in with a dual processor P5+ chip with 2 cpu's, 2-to-4 GB RAM, one or two disks totaling 400 GB to 1 TB, and cost about $3,000 with all development tools pre-installed.

With the limited single-user license, IBM would not lose any sales of their traditional servers. But think what this would do for the computer science student or single home developer! Think of all the new applications that would come from the increased "mindshare" this would attract and the new multi-user server they would sell.

Editor's Note: IBM has attractive lease options for ISVs for the 515 for this purpose. An iSociety member posed a similar question during the chat, which Herring noted was "an interesting idea."

In order to better understand announcements, can you tell me how 515 can detect the difference between internal and external users? I think the matter should be clarified for both existing and new customers.

Do not forget that 515 and 525 will be sold by BPs who are often in mutual strong compettition.

If I sell minimum i5/OS user entitlement (5 or 30) and i5/OS external access (unlimited), my offer can be up to 9.100 euros lower than an opponent's one for a 515. I could also offer a 515 instead of a 525. The customer will probably suffer performance problems due to disks and RAM limtations, but who cares? I close the deal.

For a 525 it's even worse: I can save up to 45.500 euros without performance risks.

So if there is not a clear automatic control which inhibits internal user to be masked as external, customers will be confused by different offers, and a lot af claims could arise.

I suspect IBM is not willing to clarify the matter, in order to ensure more commercial "flexibility."

It already happened.

For years I have been the only stupid one who insisted on asking customers to order the number of client access users they really needed; all the world, including IBM reps, laughed at me.

Ordering one and filling the user number field of XW1 with "nomax" was the normal "vocal" suggestion.

Tired of being considered a bigot, I gave up.

Editor's Note: This is a good point, Claudio. Sharing login information between users brings up issues of security, of course, but also regulatory compliance in situations where companies might need to control who has access to to which kinds of information. For a metal fabricator in North Carolina, for example, this probably isn't an issue. But for a small healthcare office? Most definitely an issue.