IBM is introducing new Linux-focused mainframe bundles that it says will provide discounts of up to 80% over previous offerings.

IBM's mainframe business has struggled in 2009, with year-over-year revenue declines of 26% in the third quarter and 39% in the second quarter. But Linux has been a bright spot, with 70% of IBM's top 100 mainframe customers running Linux, according to Gartner.

In an attempt to boost falling sales, IBM has taken several steps to lure new customers and capitalise on interest in consolidating Linux workloads on mainframes using IBM's virtualisation technology.

In August IBM released seven hardware, software and services packages which are known as the "Solution Edition Series" and are aimed at specific application workloads like data warehousing and SAP software. IBM also cut prices nearly in half for some specialty Linux processors known as Integrated Facility for Linux (IFL).

In IBM's latest move, announced Tuesday, the company is releasing a new mainframe bundle called the Enterprise Linux Server, which starts at a little more than $200,000. The least expensive version includes two IFL processors, plus memory, I/O connectivity, licenses for the z/VM mainframe virtualization software, and three years worth of maintenance. The business class version can scale up to 10 IFLs, while the enterprise class machine can scale up to 64.

Savings per processor improve the more a customer buys, and can cost as much as 80% less than previous mainframe offerings, according to IBM.

The basic $200,000 machine with two IFL processors can run about 50 Linux-based virtual machines, says Reed Mullen, IBM's System z virtualisation strategy manager. IBM partners Novell and Red Hat are offering discounted Linux licenses when purchased with the Enterprise Linux Server. IBM hopes to lure customers away from competing platforms such as Itanium and Sun's Solaris, he says.

IBM has been successful in selling more capacity to existing Linux-on-mainframe customers, but has had trouble convincing new organizations of the economic benefits of putting Linux on System z, Mullen says.

"We want to target not just existing mainframe clients with this solution, we also want to target non-mainframe clients who are waking up to some of the realities of large-scale server consolidation," he says. "We believe those who have yet to embrace Linux on the mainframe are ready to do so more aggressively."

In addition to the Enterprise Linux Server, IBM is releasing two new Solution Edition bundles, one for Linux and one for Chordiant CRM software. While the Enterprise Linux Server is a stand-alone mainframe for new deployments, the Solution Edition bundles add capacity to existing machines, according to Mullen.

Because IBM mainframe's division is struggling, now is a good time for customers to negotiate with Big Blue, Gartner analyst Mike Chuba recently said. The Solution Edition bundles represent some of the best deals IBM has offered to date.

"If you're going to go into a negotiation with IBM right now and want to get the best price, the first two words out of your mouth should be 'solution edition,'" Chuba said.

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