IBM moves into SME market

IBM's new chief executive officer, Sam Palmisano, is expected to kick off a major campaign to go after the small and medium...

IBM's new chief executive officer, Sam Palmisano, is expected to kick off a major campaign to go after the small and medium businesses (SME) market, at the PartnerWorld conference

The move to capture SME business is designed to help IBM gain some much-needed growth, and counteract the recently redoubled efforts of competitors including Microsoft, Oracle, Compaq, and Hewlett-Packard (HP).

"IBM has to do this because their growth has not exactly been stellar in the enterprise market, which is becoming saturated," said Mika Krammer, research director in Gartner's small and medium-sized businesses group. "The SME space is growing much faster than the enterprise from a technology consumption perspective."

Krammer and others believe IBM's decision to consolidate various product lines - particularly servers - under one umbrella organisation over the past year has been a good thing. The consolidation has made it easier for SMEs, as well as large enterprises, to deal with the company and its many distribution channels when buying multi-product solutions.

But perhaps the most significant overture IBM is making to the SME market is a concerted effort to establish relationships with partners beyond its own $35bn (£24.4bn) Global Services organisation.

IBM, in many cases, hopes to leverage the long-term relationships these partners have fostered with SMEs.

"IBM is using a hub and spoke model with these other professional services vendors, who have trusted relationships with their customers," Krammer said.

IBM will use PartnerWorld to demonstrate its commitment to Web services and the SME market by rolling out a couple of new servers and a Web services program for partners.

The new services programme, called Web Services on Websphere (WOW) is intended to supply partners and solution providers with technical resources as well as marketing support to create and deliver Web services more quickly to market.

The company will try to make mainframe computing more attractive to smaller companies by rolling out a new IBM eServer z800, an entry-level mainframe computer, according to company officials.

IBM is touting the new mainframe as a way for companies to consolidate workloads from Web servers, print or file servers, and e-mail servers by moving them onto a single computer.

Available in one to four-way processor configurations, the z800 performs as a stand-alone system or in a parallel cluster of servers. "Big iron isn't just for big companies anymore," said Rich Lechner, vice-president of sales and marketing for zSeries.

IBM will also roll out a new operating system, z/OS.e. The new 64-bit operating system is built to meet the workloads of e-businesses using the z800.

Meanwhile, PartnerWorld will serve as a backdrop for IBM to announce deals struck with Denmark-based software company Navision and software company VMWare.

IBM will use Navision to deliver its Attain software on IBM iSeries and xSeries servers, an IBM representative said. It will deliver enterprise-level resource planning for small businesses, with functionality that includes financial management, supply chain collaboration, CRM, and e-commerce capabilities.

Meanwhile, IBM will use VMWare to deliver VMWare's partitioning technology to enterprise versions of IBM's xSeries server line. Partitioning will allow enterprise xSeries users to split up workloads within their xSeries server, consolidating server resources and adding additional failover capabilities.

IBM also plans to demonstrate newly released Memory eXpansion Technology (MXT) that can give administrators the ability to double the memory of a computer while increasing performance by almost as much. MXT will debut in IBM's eServer xSeries x330 server, a rackable 1.75in product from the company's Intel-based server line.

MTX relies on a high-speed hardware algorithm to encode data in a way that takes up half the space on the computer's main memory than normally required. An improved shared cache design within MTX also contributes to performance by keeping frequently accessed instructions closer to a computer's processors for faster access, IBM officials said.

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