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Big Blue purchase targets SMBs

Big Blue makes a slew of product announcements -- and acquires a company -- to show SMBs how much it cares.

The acquisition of an open source software company and a new batch of IBM Express products are the latest examples of Big Blue's effort to court small and midsized companies.

"This demonstrates a commitment to a couple of IBM's strategic markets, SMBs -- and open source," said John Madden, a practice director at Boston-based Summit Strategies Inc.

It's a huge cultural turnaround.

John Madden, analyst, Summit Strategies


IBM today announced the acquisition of Gluecode Software, an El Segundo, Calif.-based open source software provider, to help meet what IBM says is a growing demand for server software for small companies running business applications. IBM defines the SMB market as a company with fewer than 1,000 employees.

Gluecode's free software -- and its several levels of fee-based support -- provides smaller companies with a low-cost middleware option. As those companies grow and their technology needs expand, IBM will already be positioned to offer them higher-cost, higher-capability products, like WebSphere Application Server Express and other Express products, Madden said.

The latest in IBM's Express offerings focus on e-mail security, storage concerns and government compliance. These issues top the list of concerns from SMB executives, according to a recent IBM poll.

The newest Express products are "more than turning around and slapping on a new label," on older products," Madden said.

IBM's Express Managed Security Services, its eServer OpenPower Network and an SMB version of the company's TotalStorage DR550 aim to protect and securely store e-mail and help companies comply with regulations.

"It's more than just watered-down versions of their enterprise customer products," Madden said. Express products are intended for companies that "want these enterprise-caliber products, but can't afford enterprise-caliber prices," he said.

Express products are designed to get up and run quickly, according to IBM -- and make a clear and immediate impact on business.

IBM rolled out its Express line about two years ago with a handful of products. That line has now grown to 100 different offerings focused on serving SMBs.

"For IBM to put this much focus and investment is a huge deal, not just for customers, but for IBM," Madden said. "It's a huge cultural turnaround."

A recent IDC study estimates the SMB IT market will reach $360 billion in 2005.

Nevertheless, the SMB market is "so fragmented and so competitive that midmarket companies are basically being treated with enterprise gloves" by companies ranging from Microsoft to Dell, Madden said.

The fragmentation means picking a direct competitor to IBM's Express line is difficult and varies depending on the product or service.

The Express Managed Security Services hands e-mail security over to IBM for off-site checks, before reaching the customer. It is priced on a per-seat per-month basis, based on the level of service. Pricing for 250 seats and four services is about $4.25 per seat per month.

The Express eServer OpenPower Network e-Mail Security Express can be plugged into existing e-mail networks. For a midsized business, pricing is $7,950 or $237/month for 36 months.

The SMB version of the IBM TotalStorage DR550 is a scalable data storage center intended to help comply with government regulations.

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