Big Blue will start offering option to buy mainframe servers through consumption-based model
Add IBM to the growing list of hardware vendors offering their products through service-like pricing. Beginning in June, IBM will offer its Z mainframe servers with the option to buy through consumption-based pricing.
The Lowdown: The “Tailor Fit Pricing” program will offer enterprise customers of IBM’s Z Servers the ability to buy as they need capacity (consumption-based pricing) or for the precise amount they need (capacity-based pricing). The idea behind the new pricing program is to give enterprises greater flexibility in planning budget and capacity for their hybrid cloud infrastructures that leverage IBM’s Z servers and z/OS operating system.
The Details: Under both options of the Tailor Fit Pricing model, IBM is offering simplified pricing to remove budget caps, greater flexibility in annual capacity planning, and aggressive pricing to make Z servers, service contracts, and capacity expansions more economical. The big change is in the consumption side of the model, in which pricing changes with usage; as utilization goes up, pricing goes down in a volume-based scale.
The Impact: Mainframe servers remain a mainstay of many enterprise environments and pillars of hybrid cloud computing infrastructure. IBM believes offering consumption-based pricing will make it easier and more affordable for its enterprise customers to remain with its flagship server products without the worry of breaking budgets as capacity needs increase.
Background: IBM is among the growing number of hardware vendors beginning to offer their products on service-, consumption-, or subscription-based pricing models. In 2018, Hewlett Packard Enterprise (HPE) introduced its GreenLake program, in which it sells x86 servers and support through subscription-based pricing. Other hardware vendors — including Microsoft, Dell, and Lenovo — offer select products through consumption- and subscription-based models. The vendor community is embracing the consumption and service models as a means of capturing recurring revenue and making their commoditized products more economical for themselves, partners, and customers.
The Buzz: “In the era of hybrid and multicloud, everything is connected and workload patterns constantly change. In this environment, managing demand for IT services can be a major challenge. And when it comes to pricing, flexibility and management are essential,” wrote Ross Mauri, general manager of IBM Z. “As more customers shift to an enterprise IT model that incorporates on-premises, private cloud, and public cloud, we’ve developed a simple cloud pricing model to drive the transformation forward.”