IBM Hits New Low For VAR Partners

VARs of IBM's System i servers have to compete against Intel/Windows-based servers from Dell, Hewlett-Packard and other vendors. And that hasn't been easy. While the System i has a lot going for it in the way of TCO, the entry-level models haven't fared well against Wintel in terms of price--a key factor for SMBs.

So it's about time, VARs say, that IBM unveiled additions to its System i Express line, including the first model, for less than $8,000.

"With this [server], IBM has shown that it's listening," said Taber Alderman, president of Systems Implementation, a Troy, N.Y.-based solution provider, speaking at a press event in Cambridge, Mass., where the new servers were unveiled.

IBM and its System i partners have long had differing views about what constitutes a small business, says Stephen Sullivan, executive vice president of Advantedge Healthcare Solutions, Warren, N.J. More recently, though, IBM has been seeing the market through the eyes of its customers and VARs, he says.

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The System i, long known as the AS/400, is legendary for its ease of installation and operation--critical for small businesses that have few or no IT management resources. An International Technology Group report says operating costs for System i servers are generally two to three times lower than for Windows systems. And an IDC report says System i servers have operating lives almost twice that of Windows servers.

But SMB customers "didn't get the idea of total cost of ownership," said Dan Bivona, sales director at Vormittag Associates, a Ronkonkoma, N.Y.-based solution provider. That meant some sales were lost to competitors with low-priced Windows systems. "Now we're addressing the issue of total cost of acquisition," Bivona said, also speaking at the press conference. Vormittag has sought a way to increase market share by selling to more small businesses, and Bivona said the new System i should do the trick.

One new server, the entry-level System i Express model 515, starts at $7,995 with a five-user license.

IBM will rely heavily on channel partners to sell the new servers, particularly the model 515, says Steve Solazzo, general manager of IBM's global midmarket business. "We can't possibly touch the millions of midmarket prospects that could use the 515," he says. "That's where our business partners come in."