NCR’s Teradata pricing ‘illogical,’ Gartner warns

Gartner Inc. is cautioning NCR Corp.’s Teradata customers against overpaying for some recently introduced hardware, in response to what the research firm is calling “illogical pricing practices.”

The warning relates to a new generation of NCR’s massively parallel WorldMark servers that were introduced in May.

According to Gartner, the new two-processor nodes that are used in the latest WorldMark 5300 servers provide only 75 per cent of the performance available with the four-processor nodes used in the previous WorldMark 5255 servers. But NCR is insisting on selling the new nodes at the same price as the older nodes, Gartner said.

In an advisory released earlier this month, Gartner analyst Kevin Strange said NCR’s prices “are not in line” with standard industry practice.

“By comparison, recent generations of Hewlett-Packard, IBM and Sun Microsystems high-end Unix servers effectively cut the hardware cost of processing power by increasing the processor speeds by up to 50 per cent with little, if any, increase in price,” the advisory noted.

Vickie Farrell, a vice president in NCR’s Teradata warehouse group, challenged Gartner’s position. “What we sell is a complete solution that includes hardware and software,” Farrell said. “The list price on the box is totally irrelevant. We don’t sell off-the-shelf hardware. We sell uniquely configured systems that meet a customer’s particular needs.”

In fact, she said, when performance is compared, a 5300 server costs 11 percent less than a 5255 at the same performance level.

The real problem lies in NCR’s continued unwillingness to publish list prices on its hardware, Strange said. Unlike other vendors that have clearly published prices, NCR uses a bundled pricing model that gives customers very little idea about how much they’re really paying for their hardware, he said.

“If NCR doesn’t separately publish prices for its hardware, how do you know for sure that what you are getting is in fact cheaper” than previous hardware? he asked.

NCR’s habit of not publishing prices can be troubling, said Mohammad Rifaie, a senior manager of information resource management at Royal Bank of Canada in Toronto.

“This is an area of concern that I have raised with NCR management,” he noted. “Teradata is very strong in technology and total cost of ownership and brings a very good value to the table. But I think it will be to their advantage if they publish their prices.”