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HP rebates slash bundled software pricing

Permanent rebates offered for all current HP systems

Pricing on HP 3000 systems is getting an across-the-board reduction as a result of the software license rebates. “We are taking all of our hardware prices for all of our platforms and we’re making them comparable to the similar hardware prices on the HP 9000 side of the fence,” Snow said. As an example, the Series 969KS/120 will have the same price as an HP 9000 K420, he said. “We’re pretty close in most cases,” he added.

The price reductions occur in both software license fees and hardware components. Snow said the net result is that the 996 and 997 models “have had their prices come down pretty dramatically.” For example, the extra charge to add an additional processor board for a 997 was $95,000 before the adjustments, while a comparable HP 9000 board could be added for $20,000. Now the 3000’s add-on boards are priced as low as the HP-UX systems. Because of the adjustments, HP said the Series 997 5-way system is less than half the cost of what it once was.

CSY is also collapsing its software pricing tiers from seven down to three. The change means that some software will cost less, but more importantly, customers’ costs to upgrade software are likely to drop.
“We think there’s an opportunity for the customers to jawbone the various tool providers and application providers,” Snow said. “In many cases they use either our tiering structure or create their own structure. They come back and ask for more money when someone does a box swap. We believe we’re trying to lead the way here and encourage ISVs and tool providers to take the same approach.”

HP plans to make up its revenue with such volume increases. “We believe because of the pricing changes if we had no volume increase we would clearly start to have less money,” Snow said. “The only way we’re making money on this – and we’re certainly in the business of making money – is to drive volumes up. We’ve done a lot of analysis with our resellers and direct sales force, and we believe we will see substantial volume increases in HP 3000 products. We believe we’re going to make money off this price reduction, in terms of increased revenues and increased profit margins. We can make the same case to third parties – that they can potentially have the same increase. We can’t make them do it, but we can encourage them and try to lead the way.”

“By lowering our platforms, we’ve either removed the jump or reduced the jump in tier when you do the box upgrade. We’ve looked at the database/ operating system user license bundle price, and in most cases we’ve brought the prices down – before we talk about rebates,” Snow said. Some models’ software bundles have dropped 45 percent, such as the 99x systems. Pricing for the 99x systems’ software is now the same as the 9x9 systems, Snow said. Although HP has decided to increase a few of the 9x9 license fees – those for the 384- and unlimited-user licenses – most of the 9x9 software pricing has been reduced, too.

Permanent rebates for box swaps

After the lower prices come those rebates Snow mentioned. HP is making its spring sales discounts on software licenses for HP 3000s a permanent feature for customers who are upgrading from other HP 3000s. The savings don’t go as deep as the spring numbers, but Snow said they’ll be available indefinitely. Customers can upgrade to the Series 9x8 systems with a 25-percent rebate, while Series 9x9s and Series 99x systems will have a 35-percent rebate. Those 9x8 Series systems get their first rebate with the new program, after being left out of the Spring Has Sprung discounts, which ended July 31.

Snow noted that the rebates are only available to customers who stay at the same user license level as they had on their previous HP 3000s. “If you turned in a platform with a 100-user license, and you wanted to buy a 160-user license on the replacement platform, you’d get the discount on dollars associated on the 100-user license,” he explained. “You’ll pay regular price on the extra 60 users.”