"The mainframe business goes through some fairly cyclical ups and downs. … I do think that the latest drop is more severe than usual, but I don't look at it as quite so desperate as I think some people do," King says. "What you're seeing is a mix of tough times combined with the natural falloff in mainframe sales."

IBM's recent moves are illustrative of its increasing reliance on Linux as a driver of mainframe sales, King notes. IBM has argued that the mainframe, combined with the known as Integrated Facility for Linux (IFL), is ideal for consolidating x86 and Unix applications.

IBM acknowledged "new pricing" for the IFL processors, but did not offer specific numbers. The article details a price change from $90,000 to $47,500 for IFLs running on the System z Business Class mainframe.

Cutting the price was essential to help IBM compete against the latest Intel processors, IBM told the Channel Register."The price change is in part because of the increased performance with the latest Nehalem EP Xeons," Karl Freund, vice president of System z strategy and marketing at IBM, said.

King says he doesn't expect a major price cut for something as widely used as IBM's z/OS mainframe operating system. If there are additional price drops, King speculates that they would probably target other specialty processors such as (designed for business intelligence, ERP and CRM) and (designed for Java and XML).