Asked whether the SMB market was too crowded, Mills said, "Thats a problem I havent run into yet. The market is huge. There are 500,000 businesses and governments that represent the midmarket. Eight thousand businesses will buy a piece of IBM software this year who have never bought any before." However, Steve Ward, senior vice president and general manager of IBMs personal systems group, said, "In my space if you sell undifferentiated products its crowded."Duncan said IBMs ISV push into the SMB space has hurt competitors, namely Microsoft Corp. However, Mark Young, general manager for ISVs, Platform Strategy and Partner Group at Microsoft, said, "I dont see that. In fact, our ISV ecosystem across every segment is healthier than its ever been. Weve built our products first and foremost for the SMB space. Its such a fragmented ISV landscape that weve always known it was the right way to go there." Moreover, Young said, IBM makes "apples and oranges" comparisons to Microsofts definition of just what constitutes the midmarket. He said IBMs definition of the midmarket includes many companies that are much larger than Microsofts typical SMB partner. In addition, Young said, Microsoft views IBM as more competitive with its SMB partners than is Microsoftironically, a charge IBM puts to Microsoft. "Almost two years ago we started industry solutions groups and were recruiting ISVs in different industries," Young said. Yet, for IBM, "on the software side they are going to increase the amount of vertical software theyre doing. Seems like theyre going to compete with their ISVs because the bulk of ISVs are vertical." "I met with Accpac [International Inc., of Pleasanton, Calif.] recently, and they have moved their business to DB2 and Linux as opposed to Microsoft because they are increasingly seeing Microsoft as a competitor because they compete with Great Plains," Duncan said. Both Microsoft and IBM announced partnering opportunities and solutions for retail ISVs on Monday. "Our actions throughout the year indicate the importance SMB means throughout the IBM company," Duncan said.
Duncan said, "One of the key points of differentiation is we build specific middleware offerings by industry. Where you see standards by industries, such as RosettaNet and others, we are building these into our products. Secondly, we have organized our sales and services by industry, and we are now aligning our ISV programs by industry."