CEO: SMB to become IBM's 'largest industry'

Speaking at PartnerWorld, Palmisano describes SMB market as 'the biggest IT growth opportunity in the world'

The head of IBM expects the company's small to midsize business (SMB) operation to become the vendor's biggest industry focus within a couple of years.

"In two to three years, SMB will be the largest industry for us," said Sam Palmisano, IBM chairman, CEO and president, during his keynote address Tuesday at IBM's PartnerWorld conference in St. Louis. Financial services has long been IBM's number-one industry in revenue terms.

Palmisano described the SMB market as "the biggest IT growth opportunity in the world today," valued at $487 billion, with the global market currently growing at 6.5 percent annually. Forty-seven percent of IBM's SMB revenue is currently driven by the vendor's business partners, he said.

IBM's most significant announcement at PartnerWorld focused on the expansion of its Express Advantage program aimed at companies employing between 100 and 1,000 staff.

Launched at last year's PartnerWorld in Las Vegas, the initiative was previously limited to the U.S. and Canada, but is now being rolled out to 23 countries in Europe, Asia-Pacific, and Latin America, IBM said Monday. Express Advantage wraps up IBM's Express range of products for SMBs with the vendor's financial services. IBM also unveiled new Express server, storage, and software offerings.

Looking at IBM's business as a whole, Palmisano described the vendor's fiscal 2006 profit mix as "a much more balanced portfolio, and therefore much more stable" as compared to financial results in previous years. Quoting pretax income figures for fiscal 2006, he said IBM's business split was 23 percent systems and financing, 40 percent software and 37 percent services.

"2006 was the result of multiple years of strategic shifts," Palmisano said. "We made a series of bold bets and they all came together last year." Those bets included the vendor's focus on service-oriented architecture (SOA), blade servers, managed business process services, virtualization, and the coming together of software and services, he added.

As IBM continues to acquire companies, Palmisano reiterated that the company makes its purchases in order to add strategic capabilities to its existing product portfolio, not to consolidate markets.

"We're not trying to become a GE [General Electric], a holding company," he said. "That's not our strategy, it's all about innovation, integration and collaboration."

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