Big Blue battles image problems in effort to woo SMBs

IBM is hoping to attract small and medium-sized businesses, but some critics say it has some tough image problems to overcome before it finds success in the SMB market.

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IBM is hoping its new Unix-based servers will attract small and medium-sized businesses, but some industry onlookers said Big Blue has some tough image problems to overcome before it finds success in the SMB market.

"Our issue with IBM is that they've got these really great products and they've got this massive support organization and services organization, but their SMB-focused products tend to just be boiled down enterprise solutions," said Steve Hilton, a senior analyst with Boston-based Yankee Group. "They're great for midmarket, but to really say they're SMB is a bit of a stretch."

IBM said it's aware of its image problem and hopes that value-added resellers, which can work more closely with smaller organizations than OEMs, will be the key to gaining loyalty among SMBs.

"SMB is a very large part of the Unix market and one that is frankly under-represented with IBM," said Karl Freund, vice president of product marketing for IBM Systems and Technology Group. "To correct that, we're doing several things."

For one thing, Freund said, IBM is aggressively recruiting and training new business partners to "reach out and touch" SMB customers. Additionally, he said, IBM is trying to drive down the price points of SMB-focused hardware and software and create simple marketing messages for the non-technical SMB purchaser.

To continue its focus on the SMB segment, IBM last week released scaled-down versions of its P5 520 and P5 550 enterprise-class servers.

The new servers boast 1.5 GHz Power 5 processors, which are smaller than the 1.65 GHz processors found in their enterprise-grade counterparts. The downgrade allows IBM to sell the servers at lower prices.

The new P5 servers are the newest additions to IBM's Express portfolio of more than 60 hardware and software packages. The Express products, offered through the reseller community, make up the heart of IBM's SMB business strategy.

On the software side, IBM Express products include WebSphere and Domino tools, as well as DB2 and business intelligence offerings. Though he couldn't disclose any specifics, Freund said people should expect to see some new SMB-focused bundled software offering in the weeks ahead.

"There will be an announcement in a couple of weeks where we will bring out some additional software bundled offerings to help business partners get the customer up and running much faster," Freund said.

Despite its continuing efforts to reach out to smaller firms, some SMB executives remain skeptical. This is certainly true for Larry Davis, chief information officer of Sterne, Agee & Leach Group Inc., a medium-sized retail brokerage house based in Birmingham, Ala.

Davis' company makes use of a combination of Windows and AS/400 servers but only implements a limited amount of IBM software. The reason, he said, is that Big Blue has yet to offer a software package that suits the needs of his company without overdoing it.

"There is still no real driving force for a company as small as this one to go with IBM, other than a new box every couple of years," Davis said. "They would love for us to buy additional tools and products from them, but it's not a high priority [for us]."

This was first published in October 2004
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