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Commentary: IBM's name game may hold key to server market

Although the company is the market share leader in the combined server market, it holds only third place in both Unix and Intel servers--the two primary growth categories.

By Thomas Bittman, Gartner Analyst

IBM's eServer announcement is a marketing response to a marketing problem. Although IBM is the market share leader in the combined server market, it holds only third place in both Unix and Intel servers--the two primary growth categories.

See news story:
IBM unveils new name, strategy for servers

Since IBM is losing by segment, the eServer program is intended to put the weight of the IBM brand name and IBM value propositions in place of independent server brands. IBM is also attempting, again, to convince the market that e-business requires different types of server technologies in different roles--a clear message against Sun Microsystems.

IBM is taking a big gamble. In creating a new brand, it is essentially throwing away existing brand equity and must now build the new brand from the ground up. That effort will require four major actions:

•  A significant investment in marketing, for at least a year
•  Fundamental changes in sales behavior, including the practices of business partners and resellers, which may not all respond positively to this change
•  An ongoing stream of shared technology and shared program changes to put more meat in the eServer brand
•  A clear presentation of their future vision for the eServer, explaining where this is going in the long term and how it will affect existing users.

IBM focused the eServer announcement on three value propositions that cross the server lines:

•  Tools, mainly existing service offerings; some, such as capacity on demand, are expanded across the server lines but lack fundamental changes in server migration or interoperability
•  Application flexibility support for open standards, WebSphere and Linux, but lacking application integration enhancements across servers
•  Technology, mainly pointing out IBM's lead in copper and silicon-on-insulator semiconductor technologies but lacking any fundamental changes in technology sharing.

The eServer announcement is essentially a marketing move, with promises of further consolidation and cross-architecture programs and technologies in the future.

But IBM is facing an uphill battle and probably will not maintain the marketing investment required to sell its message and gain much ground. Although IBM will increase server sales--mainly within the IBM installed base--it will likely not move into first or even second place in the Unix or Intel server market. (For related commentary from an interview with IBM's Steve Ward on what it takes to be a successful CIO, see free registration required.)

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.