IBM's Pricing Assault

The effort, undertaken to help resellers avoid special-bid scenarios that often reduce profit margins, is being backed by IBM's multimillion-dollar investment in tools and advertising aimed at helping partners sell higher volumes of the selected SKUs. The preconfigured SKUs include xSeries servers and Blade Center models, OpenPower Linux systems and TotalStorage disk and tape products.

Angie Wong, CEO of Network Designs, Fremont, Calif., said the SystemSeller initiative builds on IBM's Express products for SMBs. "This is selected popular SKUs that give you the lowest price possible to compete so there is no special pricing," she said. "It has really worked well on the low- end systems."

Under the program, xSeries prices range from $1,919 to $21,199; Blade Center prices range from $2,589 to $7,289; OpenPower prices range from $4,447 to $11,498; and TotalStorage prices range from $5,355 to $13,295. Frank Vitagliano, vice president of worldwide global distribution channels at IBM, Armonk, N.Y., said this represents as much as a 15 percent price cut on the selected systems.

"These pricing actions put us right on top of Dell and in some cases make us more aggressive than HP," he said. IBM has promised to aggressively monitor the pricing and configurations of the select SKUs to ensure they remain competitive against products from Dell and HP.

Vitagliano said the SKUs provide 10 points of up-front margin, plus a 2 percent back-end rebate on any of the SystemSeller products sold by partners. It remains to be seen how much of the planned 10-point margin will be passed off to customers as solution providers compete for business against one another and Dell and HP.