IBM Debuts System i Server With Low Entry Prices

IBM is positioning the new System i Express models 515 and 525, part of IBM's Express Advantage strategy targeting the SMB market, against competing low-cost Windows-based servers from Dell and other vendors. The entry-level system is designed for five to 40 users and will have a starting price of $7,995 with five user licenses. Additional five-user licenses will cost $1,250. The Model 525, for 30 users and up, targets midmarket businesses and will have a starting price tag of $34,900.

The System i has always offered a low total cost of ownership with its minimal maintenance costs and ability to run multiple applications on a single server, said Steve Solazzo, general manager of IBM's global midmarket business, speaking at a press conference in Cambridge, Mass. But he said IBM has lost potential customers who adopted "Wintel" servers with lower price tags.

Channel partners backed that notion. Customers "didn't get the idea of total cost of ownership," said Dan Bivona, sales director at Vormittag Associates, a Ronkonkoma, N.Y., solution provider, speaking at the press conference.

That meant some sales were lost to competitors with Windows-based systems. "Now we're addressing the issue of total cost of acquisition," Binova said. The new System i servers will help his company increase market share by selling to more small businesses, he said.

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IBM will rely heavily on channel partners to sell the new servers. Salazzo, whose group accounts for about 20 percent of IBM's revenue, said his group has a large sales force. "But we can't possibly touch the millions of midmarket prospects that could potentially use the 515 platform," he said. "That's where our business partners come in."

Channel partners have been asking IBM for more help in lowering product price points, "and with this [server] they have shown they are listening," said Taber Alderman, president of Systems Implementation, a Troy, N.Y.-based solution provider, at the press event.

The new System i Express servers come preloaded with database, virus protection, workload balancing, virtualization, and storage and systems management software. They are scheduled to ship by the end of April.