Atkins Tells IBM Partners Linux, SMB Are 2005 Growth Drivers

"Last year, we challenged you to do $1 billion in Linux revenue, and you exceeded that by doing $1.12 billion," Donn Atkins, IBM's general manager, Global Business Partners, told some 5,000 attendees at PartnerWorld 2005. "Now we are challenging you to drive $2 billion in Linux revenue in 2005."

Joe Vaught, COO of PCPC, an IBM Business Partner in Houston, said his Linux business, primarily on xSeries blades, was up almost 30 percent last year. "But we are really going to rock and roll this year," Vaught said, adding that he has seen renewed interest in Linux among his petrol chemical customers.

SMB will be a big driver behind much of the new Linux business, according to Atkins. "SMB is a tremendous opportunity for you and for IBM. It's a $360 billion market," he said.

To help drive SMB sales, IBM plans to launch a program called System Seller, which provides a set of readily available, aggressively priced SKUs targeted at small and midsize accounts, Atkins said. The program is similar to what exists in the company's PC and xSeries systems but will now be expanded to include pSeries, blade server, iSeries, Global Services and Global Financing bundles as well, he said.

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Doug Elix, senior vice president and group executive for sales and distribution at IBM, told Business Partners that the company projects a 5 percent to 8 percent rise in IT spending this year, a marked contrast to the high double-digit growth in the late 1990s. "There is now a fundamental difference in the market. Not all boats will rise in this type of marketplace," he said.

Because of IBM's mix of products, services and Business Partners, Elix said he expects solution provider revenue to grow at least as much as the 10 percent increase realized in 2004. "Our objective is to win with you," he said.

About 84 percent of iSeries, 76 percent of xSeries, 66 percent of pSeries and 24 percent of zSeries revenue is generated by Business Partners, Elix said. Partners also account for 33 percent of storage, 24 percent of software and 5 percent of services revenue at IBM.

Atkins pointed out that services business totaled $32 billion in 2004, up from $29 billion in 2003. What's more, 60 percent of IBM's non-services revenue flows through channel partners, he said. "IGS wants to team even more with you, and your hard work is keeping IBM on top of the server market," he said.

In 2004, IBM extended its worldwide market share lead over Hewlett-Packard in the server space, Atkins added. And in the fourth quarter, IBM's Unix server share surpassed the combined total of HP and Sun Microsystems. He said the company also overtook Dell in Intel server share in the fourth quarter.