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IBM renews focus on small-business PCs

Big Blue launches a plethora of new NetVista desktops for small and midsized businesses, making it the latest PC manufacturer to increase efforts to gain in the market.

Small business is big again.

This week IBM introduced a slew of new NetVista desktop PCs aimed at small and midsized businesses, making it the latest PC maker to renew an effort to gain customers in the so-called SMB market.

IBM's new systems, including 10 NetVista A22p models ranging in price from about $750 to $1,900, refresh an effort Big Blue started several years ago to target the market. IBM sells the NetVista line mainly direct to customers.

Though the SMB market, defined by most as companies with less than 1,000 employees, saw the same slowdown as corporate and consumer sales during 2001, it remains an attractive target for PC makers. SMB customers tend to buy fewer PCs each than corporations, but the segment will consume about 8.6 million units in the United States in 2002, according to IDC.

"For years there was a temptation to ignore the space and say that these guys don't buy a lot," said Ray Boggs, an analyst with IDC. "It can be a challenge to reach. But (PC makers) are recognizing that they need to make a concerted effort to reach these customers."

IBM's NetVista revamp mirrors efforts by other PC makers, including Compaq Computer, Dell Computer, Gateway and Hewlett-Packard, to tap the market.

Compaq and Dell, for example, have been running promotions aimed at attracting SMB sales since last year.

Last October, Compaq launched Business Tuesday, a weekly promotion that typically offers an Evo PC or server at a discount or in a bundle with free shipping and discounted accessories and service plans.

Dell also regularly offers promotions, ranging from free shipping and rebates to zero percent financing. This month it is running a promotion that allows customers to double the RAM allotment on any Dimension or OptiPlex desktop purchased. Another promotion offers rebates between $50 and $200 on desktops.

"What we're seeing is a resurgence of PC makers trying to appeal to a broader audience, which includes SMB," said Toni Duboise, desktop PC analyst with ARS. "The large businesses, of course, are the bread and butter, but small businesses are a growing population. Because it is always growing, the SMB is very important."

Dell has developed dedicated small-business product lines. A customer could, for example, set up an office computer network using low-price PowerEdge SC servers--designed for a smaller business--and a PowerConnect switch for less than $1,000.

Small business is "a huge part of the (PC) market," said Phil Bryant, marketing director for Dell's SMB Group. "If anything...we're going to intensify the focus around that."

Meanwhile, IBM's new NetVistas include several SMB-specific features not always offered to consumers or large corporations. The new NetVista A22p models include special lease terms as well as the company's PC data migration tools and a three-year warranty.

The SMB PC market contracted with the overall PC market in 2001, shrinking by 9.9 percent in the United States. However, IDC predicts the U.S. SMB market will bounce back in 2002, growing by about 7.4 percent for the year.

"We're looking for a very strong half in 2002 from SMB," Boggs said.