IBM Goes Low With New Servers, Arming VARs To Battle Dell

IBM, Armonk, N.Y., last week unveiled two Celeron-based servers starting at $599 and $699, aimed at companies with up to 50 employees. The xSeries 100 and the xSeries 206m, which will ship in mid-October, will be sold through the IBM Express brand and System Seller channel program. They also will be sold through IBM&s Web site.

Though IBM has had some low-cost servers at “promotional” prices, this is the first time that the company, known for its high-end product line, has reached down so low in the SMB space.


Base system: $599


>> Celeron running at 2.53GHz with 256 Kbytes of Level 2 cache
>> 533MHz front-side bus
>> 80-Gbyte SATA hard drive
>> Integrated Gigabit Ethernet controller, keyboard, mouse
>> Operating system not included

“This opens us up to be able to compete with Dell in that give-away market,” said Greg Starr, president of See-Comm, a New Boston, Texas, solution provider and IBM partner.

In addition to the entry-level servers, IBM also offers options for hot-swap drives, redundant power supplies, integrated IBM ServeRAID 8e, and a management controller for server control anywhere on the network.

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“We deserve a share in that space,” said Bruce Corregan, manager of xSeries systems brand marketing for the Americas at IBM. “Our goal is to demonstrate, particularly to small customers, that we are serious about doing business with them and we are not the most expensive vendor or the most difficult vendor to do business with.”

Steve Haynes, vice president of Vintage IT Services, Austin, Texas, said the low-cost offering certainly will help IBM gain mind share in the small-business market, where it has been considered a high-cost option. But he noted it is unlikely that Vintage IT would offer a Celeron-based server to its customers.

More realistically, Haynes believes that IBM, like Round Rock, Texas-based Dell, is using the systems to attract low-end customers, which will likely be upsold to a higher-end system.

“If you want to make servers useful to the customer, you are talking about $2,000 to $3,000,” he said. “We think there needs to be at least two disk drives, backup and dual power supplies. You just can&t do that at the [$599] price point.”

IBM is just the latest vendor to test the low-cost waters. Sun Microsystems recently unveiled its Opteron-based servers with base prices well less than $1,000. Hewlett-Packard already has one low-cost model priced at $499.