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Configuration key in IBM's Linux server pricing claims

In an attempt to go for Sun's and Hewlett-Packard's x86 jugulars, IBM says its new OpenPower 720 Linux server is priced and performs better. But one skeptical analyst said what you see really all depends on what color glasses you're wearing.

IBM's claims that its new OpenPower 720 Linux server is priced and performs better than any of Hewlett-Packard's and Sun Microsystems Inc.'s x86 servers has been put to the test.

It turns out when you dig into the details that's only true if it's configured in a particular way with a particular stack of software that just happens to be included.
Gordan Haff
senior analyst and adviserIlluminata

While IBM's bold assertions may seem to some as little more than marketing play, one analyst decided to see if what IBM was saying was true.

The OpenPower 720 Linux server, which has a base price of under $5,000, is one of IBM's most aggressively priced systems. It uses the same hardware as IBM's eServer i5 and eServer p5 systems, IBM's next generation iSeries and pSeries systems based on the Power5 chip. The chip utilizes 64-bit architecture that provides higher performance than 32-bit architecture by handling twice as many bits of information in the same amount of time.

When OpenPower was released in September, IBM trailed Sun and HP in server revenue. Overall shipments of servers priced below $5,000, including servers from IBM, HP and Sun, generated $3.5 billion in revenue last year. Sun topped the charts, but IBM's introduction of a $5,000 Linux-based OpenPower 720 threw a wrench into that long-standing scenario, and IBM is taking full advantage.

Gordan Haff, senior analyst and adviser with Nashua, N.H.-based Illuminata Inc., decided to take standard performance benchmarks and prices found online for the 720 and x86 systems and then compare them side by side. His motivation for the report was simple: Was the aggressive stance propagandist hype, or was this system performing as well as or better than x86 and at a better price?

Using published results from standard benchmarks and prices available through the Internet, Haff compared price and performance of the OpenPower 720 against a commodity x86 server to scrutinize IBM's claims.

It's all in the details

What Haff found is hardly surprising. The fact is, comparing prices and performance is a tricky thing -- it really all depends on what you're comparing.

"The main thing was that we were hearing these claims from [vendors] all the time; that 'such and such a system is priced competitively.' … It turns out when you dig into the details that's only true if it's configured in a particular way with a particular stack of software that just happens to be included," Haff said. This was the case with IBM's pricing claims.

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Haff explained that when base system pricing of the OpenPower 720 is considered, IBM has been very competitive, but certainly not enough that it would "blow HP pricing away."

"IBM is slightly ahead in performance and HP had a slight [lead] with raw pricing," Haff said. "On a macro level they are essentially on top of one another, with IBM edging out x86 servers from Sun and HP."

Common wisdom commonly incorrect

In terms of pricing, Haff said over the past year he had been seeing a "common wisdom" develop about certain systems -- there is an assumption that some brands are generally cheaper or more expensive than others. He said it's simply not true.

"People believed that x86 was the cheapest, and that Dell had the cheapest of the x86s … the fact is that there is a lot of folk lore out there and there is absolutely no kernel of proof," Haff said.

While x86 systems, especially those from Dell, appear to have the edge on pricing over the past year, Haff said there are many cases where Sun servers beat out Dell for the least expensive server.

And despite IBM's reputation for being pricey, this isn't necessarily the case with OpenPower. In fact, Haff sees OpenPower as being a bit of a threat to HP and Sun in this market.

He said IBM is being so aggressively competitive in marketing OpenPower because it essentially sees the server as a transition piece between 32- and 64-bit processing.

"And in any case IBM has had a strongly performing processor, while pricing Linux system very aggressively ... therefore we see at least a reasonable possibility of making sizable market share gains," Haff said.

Haff also mentioned a report from early November that stated OpenPower had a slightly better price performance than a comparable HP system, but he cautioned the news should not be blown out of proportion.

"Essentially, the noise of those comparison studies show OpenPower is basically priced right on top of an x86 system from HP," he said.

Still, Haff said IBM's aggressive position with the 720 assures a healthy market with more choices and better prices for the user as competition keeps pricing honest.

Let us know what you think about the story; e-mail: Jack Loftus, News Writer

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