IBM's new sales pitch: We want to sell you less

With a server refresh less than a week away, Big Blue is playing up its size and tech chops as it looks to fend off forays by Dell and others eager to sell into the data center market.

Dell beat IBM to the PR punch, but does it really have the technology jobs to beat Big Blue in the server competition?

On Wednesday, Dell made a splash with a massive introduction of servers, workstations, storage arrays, and yes, even services. The message to corporate IT buyers was that yes, Dell understood their needs and could supply a variety of sophisticated hardware and software for the modern data center.

Has Michael Dell finally figured things out? Is this is the start of a dramatic assault on what has been the near-exclusive preserve of Hewlett-Packard and IBM? I wish him the best, but it's hard to get too excited. The company has been down this same road for the better part of the last two decades with limited results.

I remember listening to a couple of representatives from Dell expatiate on how their brand new enterprise services team would put a severe hurt on Big Blue. The pitch boiled down to one line: "we can offer service and support for so much less than IBM can charge." That was in the late 1990s.

Turns out that when it came to supporting multimillion dollar installations of sophisticated equipment, the calculations surrounding total cost of ownership were a lot more complicated. In the years since then, IBM's Global Services has enjoyed a remarkable run. Perhaps the recession will open more doors for Dell, which wants to appeal to a more cost-conscious subset of IT buyers. But this isn't going to be a cake walk.

In fact, next week IBM will debut its own server redesign based on Intel's Xeon 5500 Series. The new line is being touted by IBM for its ability to help reduce management costs and overall energy use. Take it with a requisite grain of salt, but IBM is positioning the announcement as its most comprehensive x86 upgrade in years. The highlights:

•  Systems with 92 percent energy efficiency

•  Blades that offer twice as many transactions per minute at 1,333 GHz

• Yearly energy savings up to $100 per server

On the software side, the announcement will include tweaks to the company's Director management suite for helping customers deal with virtualized environments.

In coming weeks, the analysts and test labs will sort out fact from fiction in the claims made by Dell, IBM, and the other computer makers lining up to make announcements surrounding Intel's next big chip proclamation. But I was intrigued by a comment by Tom Bradicich. He's an IBM fellow and distinguished engineer at the company who often winds up doing face time on customer calls.

"I met with a customer recently who had a 5 percent utilization rate," he told me over the phone, adding that this phenomenon was widespread in IT and had contributed to data center sprawl. At the same time, he noted that it's also a reason for the concomitant increase in costs and energy use.

"Price performance is appealing, but the idea that you need more servers, and so then you go out and buy more servers, is a failing concept," according to Bradicich. "If we can up the utilization rate, which is a high end concept (from the mainframe era), then we can lower the number of parts you buy. We want to sell you less."

Counter-intuitive, but it fits with an increasingly common theme at IBM, which wants to accentuate the myriad parts of its company as a way of "out-geeking" the competition in customers' eyes. That's what it's done with HP. And that's what it will play up in its competition with Dell. Who can fault CEO Sam Palmisano for flaunting what he has at his disposal? By playing up its size and tech chops, IBM figures it has a convincing story to help fend off forays by rivals eager to sell into the data center market.

To be continued...

 

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