IBM Credits Channel For Growth Of IBM xSeries Server Sales

Susan Whitney, IBM's general manager for the eServer xSeries, said worldwide revenue for the Intel-based servers increased 21 percent year over year for the third quarter ended Sept. 30.

"Business partner sales in the United States are up 33 percent this year through the third quarter," Whitney said. "And in the SMB space, channel sales are up 48 percent through that quarter."

The channel now sells more than half of all xSeries servers in North America, she said, attributing the sales growth in part to IBM's investment in technology.

"We have scalable products, and we've had a time-to-market advantage," Whitney said. "We've had eight-way Xeon servers available for six months, and we began the third quarter with the Xeon processor in the majority of our product line."

What's more, IBM plans to make 16-way xSeries servers available by year's end. "When you have a 16-way SMP Intel server, you're into mission-critical enterprise applications such as ERP and CRM," she said.

IBM's strategy is to bring to the Intel server space all the scalability it has employed in the mainframe arena for decades, Whitney said.

"Customers don't buy all the capacity up front. They buy it as they need it," she said. "That's the way the mainframe world has operated, but that's not the way the Intel world has ever operated. We're taking all of our experience in mainframes and bringing it to Intel servers."

Solution providers will play an important role in deploying 16-way servers, she said, adding, "If you're selling a 16-way ERP solution, it can't be done over the phone. You need a solution skill set that our partners provide."

But more important, IBM business partners are grabbing market share in the lucrative SMB space, Whitney said, defining companies in that niche as those with fewer than 1,000 employees.

Solution providers agree that momentum is building for xSeries servers.

For PCPC, a solution provider based in Houston, xSeries sales have grown by almost 400 percent this year over last.

Joe Vaught, president of PCPC, attributes the boom in xSeries sales to a huge interest in Linux clusters.

"Our customers are getting dynamite results on Intel clusters running Linux," he said. "Those are much less expensive [than clusters running Unix, and customers can get an easy return on investment. This tough economy is a boom for Linux, and we're hoping to triple our business next year."

Vaught credits the growth of his business to his realization four years ago "that Linux was going to eat Bill Gates' lunch," he said, praising IBM, too, for jumping on the Linux bandwagon early and putting huge corporate resources behind the operating system.

"People on the street have confidence in both IBM and Linux because IBM is spending billions in research [on the OS," Vaught said. "I'm going to hang my hat on IBM and live or die with them until something better comes along."

Another reason for xSeries sales growth is that more solution partners have made a greater commitment to IBM in recent months, Whitney said. IBM's commitment to Linux, and fallout from the merger between Hewlett-Packard and Compaq, are also helping IBM secure more business with the channel, she said.

"The market dynamics are favorable for us," Whitney added. "Some competitors in the Unix world have more expensive implementations, and customers realize that a deployment with xSeries and Linux is only 25 percent the cost of [a Unix deployment. And [because of the HP-Compaq merger, business partners want to balance their portfolio and their risk. That means opportunities for us."

Photography by Stephen Mallon for CRN