Although most of the feedback about IBM's new 515 and 525 models has been positive, plenty of readers have shared concerns over pricing for existing customers. IBM is in a tough position here — and don't get me wrong, I'm not apologizing for IBM, just noting the reality of what they're up against. The company has to find ways to price and power new boxes at a low cost — primarily for its Business Partners so that they can bundle solutions and sell end-to-end packages. From an IBM perspective, ideally those packages are going to include "modern" applications that will benefit from the open processor on the 515 and 525.

For existing customers, however, the requirements and pricing scenarios are all over the map — and come upgrade time, the cost for a new 525 might be more expensive than before. Sure, you're getting more processor with the 525, but some shops don't really need the full processor for their particular workloads. Dave Bauer just priced an upgrade from an 810 into a 520 or a 525, and the resulting cost difference he describes below will boggle your mind.

I have no doubt that if pushed — on an individual or groundswell basis — IBM would address the issues for existing 520 customers. Until then, customers who upgrade sooner rather than later will have some tough choices and/or difficult sales issues ahead of them until IBM comes up with a reasonable method for upgrading.

From Dave Bauer:

Although the price point for the 515 seems low enough at first, the more webcast and teleconferences I sit in on the more I am learning that it is not. I learned yesterday that WDS is not included, nor is Query — two items that are must-haves for us. Also, the entry price only includes three months of 9x5 support.

Comparing the two for small business, let's say a 20-user company, to get the support you need one year 24x7 and 20 users — that's $9,995 for a machine with support and five users, three more units of users at five users per unit at $1,250 per unit, that's $3,750.

Now we are up to $13,745 without WDS and Query. WDS on the 520 Express was listed at $1,825, so add that to our $13,745 and we are up to $15,570, keeping in mind that we still don't have Query/400.

Entry plus on a 520 Express is $14,500, which will easily handle a company of 20 users, provided you are only doing traditional RPG and COBOL programs, and it includes all items above.

As I said, the more I hear, the more I find items that are now a charge, and that really pulls that entry price way up.

One other thing: I just got a quote for one of my clients to upgrade from an 810 into a 525 or a 520 — this is for 250 users. The conversion upgrade charge on the 525 is $50,200. On the 520, it's $29,400 adding in $25,000 for users. The two machines with exact hardware, other than CPWs of 3800 and 1200: the 525 totals $97,121, and the 520 totals $57,371.

Huh, certainly this is what we have to look forward to at the end of the year when they phase out all 520s.

Editor's Note: In a follow-up e-mail exchange, Dave noted that with user-based pricing, the cost would keep going up with users while the price on the 520 would stabilize. Of course, Dave likes the fact that we get the whole processor. "While it's [525] going to be a great thing for Workplace, Webfacing, PHP, and all Java workloads, traditional languages aren't getting much and are paying more," he notes.