Almost six weeks ago, we broke the news that 2nd Gen Intel Xeon Scalable M SKUs were being discontinued. We wanted to check-in and see if they indeed were out of the supply chain or if they were still being sold. This is important because a simultaneous repricing action happened to reposition the 4.5TB memory capacity “L” SKUs to the price points previously occupied by the “M” SKUs. Essentially, the “L” SKUs became thousands of dollars less expensive per CPU. One might assume that the market would shift quickly from M to L, but as we found out, this is not necessarily the case.
Major OEMs Still Pushing Discontinued Xeon M Parts
We did not want to check this immediately after the announcement, but five to six weeks later we decided that was enough time for the changes to work their way through systems. The discontinuance program is officially in progress and we are around 60 days from the last discontinuance order and shipment date.
Sure enough, Intel ARK shows that the Xeon “L” pricing now matches the Xeon “M” pricing. You can see the list pricing on ARK now has both the Xeon Platinum 8276M and Platinum 8276L parts as the same $11,722.
When we looked at Dell EMC PowerEdge configuration pages, such as the PowerEdge R640 server we reviewed, we saw this:
While the Intel Xeon Platinum 8280L and Xeon Platinum 8280M parts are the same prices, the Platinum 8276L is a ~$3500 premium part over the Platinum 8276M. Likewise, the Intel Xeon Platinum 8260L is around $4000 more expensive than the Platinum 8260M. Assuming Dell EMC was passing along the new Intel list pricing changes according to the January 15, 2020 Intel PCN, the pricing would look more similar to the Platinum 8280L and 8280M. This is not the case.
Dell EMC is not alone. Lenovo also has the Platinum 8276M and Platinum 8260M listed alongside their L counterparts in configurators. Here is a screenshot from the configurator for the Lenovo ThinkSystem SR650 we reviewed.
Here the Intel Xeon Platinum 8276L enjoys about a $3600 post-web discounting premium over the discontinued Platinum 8276M. The Xeon Platinum 8260L enjoys around a $3900 web discounting premium over the discontinued Platinum 8260M.
Update 2020-02-23 18:30: HPE contacted STH to let us know that they have officially matched L pricing to M pricing so customers with HPE can get the benefit of lower pricing immediately.
As background context, major OEMs have longer supply chains and so it takes them time to work through inventory. This is much like how when DRAM prices took a nosedive in 2019 it took major OEMs time to match price decreases that were being offered by smaller players who were not holding DRAM inventory. The converse is true in that with rising component costs, these large inventories can help soften the impact at major OEMs.
Still, this is why it is important to be an informed buyer of server products. One may think that large server OEMs would pass along new pricing that has been publicly disclosed by Intel. In some cases, for example with the Dell EMC Xeon Platinum 8280L pricing these new lower prices are being passed along. In other cases, large OEMs are betting that their customers are not up-to-date on industry pricing and are therefore disinterested in major shifts in underlying component costs. Major OEMs can sell their servers at whatever prices they decide not tethered to component pricing changes.
For STH readers, we suggest if your sales rep refuses to budge on pricing, get a competitive quote from an OEM that has updated their pricing and send that along with the Intel PCN or our articles to support discounting off of these inflated option prices, especially if a quote contains a Xeon M SKU.