HP, IBM make new plays for the SMB market

IBM and Hewlett-Packard, in separate announcements Tuesday, each used words such as "simple," "reliable," and "affordable" to describe how their new products serves the small-to-medium business market.

IBM says it is introducing a new entry-level server, the System i Express, with a starting list price of $7,995 that can be shared with up to five end-users. Each group of five additional licenses costs $1,250. It comes preconfigured with an IBM operating system and IBM database, security, and system management software, though a customer could substitute other brands. Previous System i servers started at $12,000, which put them out of reach for many SMBs.

HP, meanwhile, introduced a new storage system, the All-in-One System Storage 1200, which offers 3 terabytes of storage for $8,759. A terabyte is 1,000 gigabytes of storage capacity. HP calls it the All-in-One line because it stores, shares, manages, and protects data.

Both $90 billion-plus companies held competing morning launch events in San Francisco.

Both companies say the SMB market is lucrative because it gives vendors the opportunity to start a relationship with a company early and continue to sell to them as the business grows.

IBM estimated the size of the SMB market for hardware and software in 2007 at $330 billion globally.

But IBM had been priced out of the market, said Robert Fish, president of Responsive Data Systems, which sells point-of-sale technology based on the System i platform to businesses, mostly retailers. Fish has tried to sell System i to the many outlets in a franchise chain but found that while the franchisors liked the technology, they knew franchisees couldn't afford them.

"We could never get the corporate blessing because the cost was too high. Now we have a chance to go back and show the franchise marketplace that there is a solution they can afford that is reliable," Fish said.

The System i Express is powered by the Power5+ processor, which makes it possible for the IBM platform of hardware, processor, and software to reach a new market, said Mark Shearer, general manager of System i for IBM.

"Now we are relevant again to small business," said Shearer.

HP's All-in-One 1200 is the fourth in its new line of storage systems aimed at the SMB market, which is typically companies with up to 1,000 employees.

HP took into account the SMB's need for easy-to-understand storage management, said Harry Baeverstad, SMB director for StorageWorks, HP's line of storage products.

"We manage it from the point of view of how many mailboxes you want to serve, how big is your SQL database storage, and how often do you want to back it up," Baeverstad said. "It's really an application-centric storage management ... and you can do it in less than 10 mouse clicks."

HP also announced a reorganization of its storage business. Baeverstad's position is new, and Urs Renggli has been named to the new position of director of worldwide SMB activities in the Technology Solutions Group.

This story was corrected on April 11, 2007