Does IBM Matter To You?

Too Focused On The 'M' In SMB
Despite these results, many solution providers express ongoing frustration with IBM over a variety of important issues including administration costs, sales rep coverage and getting price quotes in a timely fashion.

Distributors have noticed the problems, too. Both Dell, Round Rock, Texas, and HP, Palo Alto, Calif., gained share from IBM in sales through the channel in the sub-$2,000 server market from June 2006 to May 2007, according to NPD Group, the Port Washington, N.Y.-based firm that tracks sales through distributors.

One top distribution executive, who asked not be named, said HP now has a much clearer partner strategy than IBM. "Resellers know where to get help, where to escalate issues and where to get field support when they need it. That, in and of itself, is clearly superior to where IBM is at right now," said the executive. "There is some stuff that the distribution community can provide, but there will always be a need to have a badged employee of the manufacturer for support. At IBM, that is harder to find, particularly when you're not selling higher-end boxes. If you're truly focused on the SMB, there is a gap in coverage there. And they have suffered to a degree."

If IBM doesn't have enough problems competing with HP in the SMB space, Dell now is also generating excitement since Michael Dell proclaimed that direct is no longer his company's religion. "I think Dell will be another viable option out there," said the distribution executive. "That's a factor that IBM has been slow to react to. HP behind [Chairman and CEO] Mark Hurd has been beating that loyalty mantra like a drum. As much as HP has ruffled feathers sometimes, there's a degree of comfort there. If HP says they have your back, they will be there. [Meanwhile], Dell is the new guy. They're pretty fresh and want to get into opportunities they've never been around before. You don't get that excitement around the IBM brand right now."

Some solution providers have gone so far as to say that IBM may in fact be abandoning very small business—those companies with fewer than 100 employees—choosing instead to focus on midmarket companies that more closely match its heritage of enterprise sales.

But Marwaha denied that claim. "Absolutely not," he said. He did acknowledge, however, that IBM has a set of resellers that tend to focus on the higher end of the SMB market. But he said that the changes in IBM's channel structure to better focus on SMB are designed, in part, to address those issues.

Next: Shaking It Up