IBM Sees Solution Providers As Key To SMB Market Gains

Attacking SMB with solution providers was a strategy that echoed throughout the first full day of IBM's annual PartnerWorld conference in San Francisco.

Peter Rowley, general manager, IBM global business partners recited the impressive contribution solution partners made to IBM revenue in 2001 in his Monday keynote to business partners. Rowley said business partners generated 56 percent of all IBM eserver sales, 83 percent of iSeries sales, 74 percent of pSeries, 66 percent of xSeries, half of the storage sales and 52 percent of IBM's total SMB sales last year.

But Rowley said IBM is clearly focused on SMB, a market the company says is now as great as the opportunity for large enterprises. "SMB is a tough market," he said. "We can't get there without solution providers and integrators."

Added Ginni Rometty, general manager, IBM Global Services Americas, "We can never reach companies with under $100 million in revenue, so we want to take leads to business partners and have them bring in IGS scaleable services."

Mike Daniels, general manager, IBM Americas noted that the SMB market represents 110,000 potential customers with an IT market opportunity of $500 billion. "We don't play in about 70 percent of those enterprises which is why we count on you (solution providers)," he said.

Rowley said that as a matter of strategy, IBM would be using more rebates to solution providers rather than product discounts as a way to increase market share in SMB. Already IBM pays rebates for competitive wins and SMB growth. "We will use rebates more often to influence different places in the market," he said. "Over time we will strike a balance between discounts and rebates."

He said rebates give IBM a chance to better influence market behavior and strengthen business partners' bottom lines. Discounts, on the other hand, too often go to the street with partners competing with one another soley on price, he said.

"Business partners have told us that their biggest competitor is often another IBM business partner," he said.