IBM Targets Dell Customers

Vendor says its servers cost much less to operate than competitor's.

Turning the tables in a difficult economy, IBM has launched an offensive to lure customers from Dell Computer Corp. by claiming its Intel Corp.-based servers cost up to 80 percent less to operate.

While IBM is the worldwide leader in server sales, based on revenue, the computer maker ranks third in Intel-based server sales globally, with Compaq Computer Corp. and Dell ranking No. 1 and No. 2, respectively, according to Gartner Dataquest, in San Jose, Calif.

IBM chose to target Dell because of the Round Rock, Texas, computer makers strong growth in server sales in recent years, largely attributed to its perception as a low-price leader. Last year, Dell passed Compaq to become the top Intel-based server vendor in the United States, according to Gartner Dataquest.

"They are a natural enemy for us. They are a competitor that shows up in a lot of bids," said Jay Bretzmann, worldwide director of IBMs Intel-based xSeries servers. "One of the things they have going for them is price, but its truly a misnomer." IBM, of Armonk, N.Y., said that its self-healing technology, featured as part of its Director 3.1 system management software, dramatically reduces server failures and cuts down on costly downtime compared with similar Dell systems.

Using a server availability measurement tool developed by Gartner Inc., IBM is touting substantial total-cost-of-ownership savings, tied, in large part, to potential business losses incurred due to server downtime.

IBM said a medium-size business running generic applications on its eServer x220 would save $53,110 in operating costs over five years, when compared with a similarly configured Dell 1400SC server. For large businesses, the savings would be even more dramatic, IBM said, amounting to a savings of $553,280 over the same period.

Such potential savings spurred one system manager to switch from Dell to IBM servers. "As far as inventory management, remote support and that sort of thing, its been a great tool," said Hensell Harris, network administrator at Sea Island Resort, in Sea Island, Ga., which uses five xSeries servers. "We can manage our systems with less effort by providing enhanced service and support with a fewer number of staff members."

One of the most notable features of Director is its self-healing technology, developed as part of the companys eLiza project, which is designed to detect and alert users to potential problems before they disrupt system performance or cause system failures.

While IBM has a technological edge over Dell, one analyst said, he remains skeptical of claims of up to 80 percent savings. "Ill grant that IBM has some better system management technology than Dell does, but some of the data theyre coming out with looks a bit exaggerated," said John Enck, a server analyst with Gartner, in Fort Collins, Colo. "I think they did themselves a disfavor by trying to show differentiations that are so great."

Nevertheless, Enck said, IBM has clearly gone on the offensive to boost sales of its Intel-based servers, even slashing prices to undercut rivals bids.

"Ive seen IBM beat everybody on price if they want to deal. Ive seen them sell their servers at what I believe was a loss to get the business," Enck said.