IBM Woos Small Enterprises

IBM's new focus on smaller enterprises could go a long way in filling the need for more revenue. But if it doesn't work, it will be a lot of money squandered.

Frustrated by the challenge of growing its sales dramatically among the large enterprises where it already dominates, IBM has turned its attention to smaller enterprises in a big way.

For IBM, pursuing smaller enterprises is a corporate imperative across the companys software, hardware and services units. In its most recent quarter, ended March 30, IBM reported impressive profits of $1.7 billion, up 21 percent from the same quarter last year.

However, the companys $20.7 billion in revenue rose only 4 percent from the year-earlier quarter, adjusting for the sale of IBMs PC division to Lenovo Group and for currency fluctuation.

The small-business push, if successful, could go a long way toward filling the need for more revenue. But if it doesnt work, it will mean significant R&D dollars squandered without a big revenue boost. Hewlett-Packard is likely to surpass IBM in gross revenue this year to become technologys largest vendor.

To woo smaller customers, IBM is offering what it calls a Concierge Service for customers interested in its Express Advantage products, which are tailored to small enterprises. Customers can call an 800-number to connect with IBM or a business partner, said Steve Solazzo, IBMs general manager of global midmarket business.

In hardware, the Armonk, N.Y., company is tailoring for smaller customers wares once sold only to big enterprises. It recently rolled out blade servers optimized for small enterprises; a small mainframe, the z9 Business Class; and a storage bundle geared to small and midsize business buyers, the IBM System Storage DS4700 Express.

In software, IBMs Tivoli unit earlier this year rolled out four management products in its Express line of offerings for small enterprises that focus on security, storage management, provisioning and monitoring.

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In services, IBM is seeking to develop packages that can be sold to smaller customers with little customization. "Were trying to get more repeatable offerings. Its a change of mind-set. Instead of looking at things deal by deal, you look at the market," said Kevin Custis, partner and management solutions leader at IBM Global Services.

In March, IBM cut the ribbon on a $200 million development center in Bangalore, India, to create software components that can be sold worldwide with little customization.

These Bangalore-developed software pieces could be sold in IBMs Express Services portfolio, which can be sold by IBMs channel partners or directly by the company.

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