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HP responds to gap between MPE and Unix/NT price with discounting

The discounts are limited to the upgrades to Series 9x9 systems in the first round, framed as a Spring Has Sprung sale for HP 3000s by marketing manager Roy Breslawski. (See our FlashPaper story in the April 1998 NewsWire.) CSY is dropping the price on operating system licenses during upgrades, responding to customer complaints that the old pricing penalized customers for sticking with their 3000s.

“It hardly makes us feel like a valued current MPE customer when we pay the same as someone new off the street,” said Mark Landin, a systems administrator at T.D. Williamson, Inc. “Sure, we are getting $4,000 or so for our old 949 – but the MPE we are running on it that we paid for is still perfectly good.”

Breslawski said that CSY’s Spring Has Sprung discounts are going to fall short of eliminating a second charge for MPE/iX licenses during upgrades.

“I don’t want to go all the way to the extreme of saying you should never pay for a user license more than once,” the marketing manager said. “The reality is that in the market at large, you tend to buy software every time you get a new box. What comes up is that cost of the software on a 3000, relative to the hardware, is not quite the same balance as what you’d see for a NT server, for example. What we’re trying to do is bring that ratio in line.”

The ratio changes to the tune of at least $19,040, the discount HP is giving off 8 user MPE/iX license fees with no database included. A 100-user license with IMAGE/SQL gets a $42,400 discount, and an unlimited license discount with that database qualifies for a $78,840 discount. The standard HP trade-in credits – ranging from $5,000 to $25,000 when upgrading to the 9x9 line – also apply.

Landin said the shift in the licensing fees was bound to help some customers and was a good sign of CSY’s intentions toward its installed base.

“I think it’s good in general that HP is finally addressing an area where they seemed to be a little apathetic in the past. This of course will help their installed base quite a bit, but doesn’t do much for the new customer base HP says they are going to begin targeting. Of course, membership has its privileges. Perhaps a general across-the board price reduction for MPE/IMAGE would accomplish similar positive results in the new customer market.”

“The discounts probably won’t help us anytime soon, because we just got done buying a new 939/020, right before the discount program was announced,” he added. “But it would have helped us a lot. I don’t know if we would have used the savings to buy a larger system or not, but the purchase would have been easier to justify with a smaller bottom line.”

Another 3000 customer is still waiting for relief in upgrade fees, since he owns a system not covered in the current discount program, which runs through July 31.

“Being the unfortunate – in this case – owner of a 918, I’m still stuck with no solution unless I’ve missed something in the announcements,” said Peter Valier, Systems Administrator at Misco Canada Inc. “In fact, it now appears that HP will be losing yet another customer, as we will likely be consolidating our HP 3000 out of existence and onto a machine owned by a sister company – since I can’t justify the incredible upgrade price and no credit for what I’ve already spent with them.”

Breslawski said the current discount plan is only the beginning of what customers will see over this year. More discounts will be announced in August, around the HP World conference, he said.

Ken Sletten, chairman of the SIGIMAGE user group and a manager of a Series 959 in the Pacific Northwest, said the first round of cuts are a good move to keep the 3000 a leader in value. It was a move that was overdue, he added.

“CSY might have hung on to a couple more HP 3000 customers if they would have realized they needed to do this a year ago,” he said. “But clearly this is a case of much better a bit late than never.”

“[The discounts] are a significant step in the right direction,” Sletten said. “Considering the added value inherent in MPE, they do a lot to mitigate the ‘upgrade penalty’ compared to HP-UX. It should now be a lot easier for sites running older boxes to justify upgrades to their bean counters – especially those with high user license numbers.”

Breslawski said that CSY had to forecast that the program wouldn’t have an overall negative impact on the division’s results for the fiscal year, so it is expected to generate new upgrade revenues. Sletten said while the discounts might have been bigger, customers need to consider the importance of having a strong and profitable HP 3000 division, too.

“From the customer’s point of view discounts are never big enough,” he said. “I expect HP’s point of view is that they can’t give the software away and stay profitable. So the 40 percent cut seems like a fairly reasonable compromise to me.”