Because of some comments I made, a correspondent on the SAG-L mailing list asked my opinion about zIIPs and zAAPs and software licensing. I thought I’d post part of my answer here.

My take on this is that the industry hasn’t figured out a rational way to price software, so all sorts of silliness or even evil keeps happening when businesses try to charge for it. I’d recommend this blog post: The Economics of Software.

So, software is expensive to produce but cheap to distribute. On the other hand, it’s not easy to switch from one “brand” to another. From the point of view of economic incentives, software vendors are a lot like drug dealers. If you’re not already a customer, they’re willing to provide it for you cheap in order to get you hooked. Once you’re hooked, though, they can make a lot of money by raising their prices.

For IBM, where they are the only supplier of the hardware needed to run the software, you have hardware lock-in as well.

If you look at everything IBM has done with zSeries pricing in the past decade or so, a clear theme emerges: they are trying to lure new customers to the platform while continuing to extract monopoly-level revenues from their existing customers. Whether we’re talking about IFLs and zIIPs and zAAPs or z/OS.e and zNALC, it all comes down to that.