Considering total cost?

Vendors, customers know upgrades go beyond hardware price

Software vendors were still repricing their products and determining upgrade charges in the month following the A-Class and N-Class rollouts. While HP has talked about going to a three-tier pricing structure based on processor power, it’s not that simple for third parties.

Simon Tsalyuk, owner of utility software provider OmniSolutions, is going to a six-tier price list, up from three. “You can’t really duplicate what HP has done,” he said of the price changes. A400 systems are on his lowest tier, but the A500s are in his second tier. Prices have increased by about $250 in that range, but OmniSolutions is crediting all customers for the license fees they’ve already spent.

At other vendors, the repricing is still under wraps. ORBiT reported it was considering how to price for the new systems. At M.B. Foster Associates, some upgrades to the A-Class systems will incur only a $500 relicensing fee.

Others will trigger a higher charge. “We had to add new pricing in order to include the A and N classes,” said MBFA president Birket Foster. Moving from a 917 to an A-Class incurs an upgrade fee for DataExpress, while moving from a 947 incurs only the license change fee.

At another software supplier, upgrade fees were being determined on the basis of whether the site had stayed on support in the past three years. Foster said 3000 owners need to calculate all costs before approaching management for a budget to buy the new systems.

“One of the problems is that the hardware vendors are usually the first people contacted, and they take all the budget,” he said. “The inexperienced system manager will often jump at the hardware price, tell his boss that’s what he needs for budget, and then have to go back to the well for more money.”

Some 9x7 owners are bracing for big bills. Lou Cook said his 937LX “is running out of gas. I had planned to migrate our operations to our NT network by April of 2002, but it’s clear we won’t be able to do that by then. We were going to have to upgrade to something faster, but I hadn’t determined what. We’re a PowerHouse shop, and I was dreading the upgrade fee since we would also need to upgrade our 64-user license to 100 users.”

It’s unclear where such user-based pricing plans will go in a world where HP now sells only unlimited user licenses for A-Class systems. For Cook, “The A400/500 looks like a potential winner to us, but I haven’t got the costs yet. [Lower hardware] maintenance fees are relatively small potatoes for us. The big question is the Cognos fee. What will they do with the A400/500, since it’s now the bottom of the barrel as far as hardware tiers go? How will they price our upgrade now that there are no user license tiers?”

Ed Stein, MIS manager at auto component manufacturer Calsonic Yorozu, is also measuring the A-Class offer against software expense. “A very important consideration for 9x7 owners is whether they will experience a software upcharge for their HP and non-HP software,” he said.

9x7 owner Ray Myers of Vera Light and Power believes that “tiering software or basing costs on relative performance doesn’t seem appropriate. Some of these tools are very handy and useful. But paying twice as much for the same utilities, just because the HP 3000 they’re now on runs faster, doesn’t seem reasonable.”