By William Fellows
Hitachi Data Systems Ltd reminds us that Computer Associates International Inc has extended its Millennium mainframe software pricing scheme to support HDS’ OS/390 Trinium and Pilot mainframe users. Millennium doesn’t just apply to IBM’s S/390s. HDS says it still isn’t clear what CA will actually charge under Millennium or how users can migrate to it from their existing maintenance plans, but we asked CA and what it told us was fairly clear.
The Millennium price plan puts a cap on mainframe software maintenance charges at 600 MIPS. Users with bigger systems won’t pay any more than this. Moreover charges for maintenance work carried under the Millennium plan, including upgrades, 24×7 support and bug fixes, have been cut to a third of the regular price. Users have to make a fairly substantial commitment to CA however. The entry fee for the Millenium pricing model is 60% of the base price of the CA product and users must sign on for a five-year term.
The license also offers customers an optional grace period, which lets companies avoid having to pay for new licenses in the wake of radical change, such as company acquisition or divestiture, CA said.
It’s good for users on those on short-term contracts but those who have longer haul arrangements with CA will be wondering how they can move over to the new model. There are no new incentives for switching from BMC Software, Tivoli or other mainframe systems management software to CA.
Nevertheless CA has taken a bold step with Millennium it because it still does 50% of its revenue selling software on S/390s. But it’s facing fierce competition from IBM, which is desperate to boost sales of its own software as revenue from sales of S/390 hardware tumbles on the back of falling mainframe MIPS prices. IBM offers incentives such as free migration from CA software to its own OS/390 system software.
Hitachi expects the competitive landscape will lead other ISVs including Candle, BMC and Compuware to follow CA’s lead in re-pricing software.
Not only is the market for mainframe market being influenced by competitive pressures, but IBM has clearly indicated its long- term plan is to move away from charging customers for software according to the size of a system itself as measured by MSU millions of service units, to one where users pay only according to the CPU cycles an application uses regardless how big the system itself is. So far it’s taken just a few tentative steps down that path by introducing pricing per MSU rather than a flat monthly charge based upon system size. Candle and BMC have aggressively touted their commitment to IBM’s long-term goal.
HDS says usage-based pricing is a good idea but very actually a very difficult concept to implement. For the next six to 12 months the mainframe software market is going to be very convoluted as new models are introduced, HDS believes. With graduated monthly fees and MSUs ISVs know what to charge, but each new change to the pricing scheme will take ISVs at least a couple of months to figure out what to charge for their software.
Long-term, ISVs will need efficient programs that can run on a customer’s system, to measure usage and report back. Unless monitoring is constant how does an ISV know that application usage at any given time is representative of general activity? HDS asks. Moreover IBM is going to have to work out how it can make changes without hurting its own software revenue. Most ISVs are taking a wait and see approach, HDS believes.
HDS says interest in its recently VSF virtual server facility is high although the technology has only just begun to ship. It claims Amdahl Corp has nowhere near the level of support for its virtual server technology that ISVs have committed to its VSF.
Meantime, HDS says it’s doing all it can to change its image, knowing it’s lagged IBM and Amdahl. It will roll out iSuite software and services and will install software that enables it to monitor system performance and provide capacity planning reports to users.
