IBM initiative shoots for the middle

Big Blue sets out to court medium-size businesses with its WebSphere software and Global Services offerings, which it generally reserves for larger businesses.

John G. Spooner
John G. Spooner Staff Writer, CNET News.com
John Spooner
covers the PC market, chips and automotive technology.
4 min read
Big Blue might also become known as "medium blue" as IBM mounts a renewed effort to court midsize companies.

IBM on Wednesday expanded its efforts to court medium-size businesses--that is, companies with between 100 and 1,000 employees--with its WebSphere software and Global Services offerings, which it generally reserves for larger businesses.

Through its Express product development and marketing campaign, Big Blue will deliver a suite of applications, services and hardware designed, priced or packaged specifically for midsize businesses.

Express will be based on several new versions of IBM's WebSphere portal software, new packages from IBM Global Services and new PC models. The company will back up the program with a $200 million advertising campaign designed in part to send business to partners that carry or install its hardware and software.

While small and medium-size businesses purchase less hardware, software and services per company than do Fortune 500 firms, their use of technology has made them collectively a large opportunity for companies such as IBM. Because of the relative strength of the market as a whole, IBM and competitors including Hewlett-Packard and Dell Computer in recent years have launched and relaunched a number of programs that target smaller businesses.

As its takes on the mid-market, IBM thinks it can parlay its experience tackling complex computing problems at large companies, said Marc Lautenbach, IBM's general manager for small and medium business. Business from small and medium customers now represents about 22 percent of IBM's revenue, he said.

"The medium-sized market is a lot closer to the large systems marketplace than consumer and small business (customers are)," Lautenbach said. "It's a market that buys industry-oriented applications, so they are very sensitive to what industry the customer is in as opposed to small businesses."

Midsize companies also face the problems of integrating disparate systems, while smaller companies tend to use Microsoft's Windows operating system, Lautenbach said.

Indeed, IBM's middle market push is a direct assault on Microsoft, which has typically been strong with small- and medium-size companies. To take on Microsoft, IBM has created packages of hardware, software and consulting services to simplify purchasing and is introducing financing options that will allow companies to pay for IBM wares monthly, Lautenbach said.

"To be a legitimate (mid-market) provider, you need to do more than (Microsoft) Office and Windows," he said.

The Express products have also been designed for relatively simple installation and administration. Express versions of WebSphere software will be geared toward streamlining operations and saving money for midsize businesses, the company said in a statement.

One new version, dubbed WebSphere Commerce Express, will work to help companies to quickly create and manage e-commerce Web sites, IBM said. Another, WebSphere MQ Express, is designed to help companies create computer code that links different applications without custom programming, often a time-consuming operation.

The company will also launch IBM eServer Integrated Platform Express for Employee Workplace, a hardware and software package designed to allow companies to build and host internal Web sites that serve as a repository for data and allow employees to collaborate. The package will be based on IBM eServer xSeries 255 servers that run Linux and the WebSphere Portal Express software. It will be available in September and start at $35,000 for a package that outfits 20 employees, IBM said.

IBM's Global Services arm will also offer packaged Express services such as one under which IBM stewards a company's server hardware either on site or at one of IBM's own data centers.

Would you like a PC with that? Though it intends to lead with software and services, IBM will also offer several new PCs under the Express banner.

The company will sell Express versions of its new ThinkCentre A30 desktop, along with its ThinkPad R40 and ThinkPad X31 notebooks.

A ThinkPad R40 289723U Express model will start at $1,399. The machine comes configured with a 1.3GHz Pentium M processor, a 14.1-inch screen, 256MB of RAM, a 20GB hard drive, a CD burner and an Intel 802.11b wireless module. A ThinkCentre A30 819891U model is fitted with a 2.4GHz Pentium 4 processor, 256MB of RAM, a 40GB hard drive and a CD-ROM drive. The machine starts at $699.

IBM also officially introduced the ThinkCentre A30 family on Wednesday. As previously reported, the PC line starts at $469 and competes with Dell and HP very closely on price.

But even with lower hardware prices, IBM will find stiff competition from the likes of Dell. A Dell Dimension 2350 desktop fitted with the same hardware as the A30 model--but also with a larger 60BG hard drive--sells for $10 less, according to Dell's small-business Web site.

With its PC prices and features matched so closely with competitors like Dell, IBM is again turning to software to set itself apart.

The company has begun to differentiate its PCs by installing a suite of software on each machine before it leaves the factory. The software, dubbed ThinkVantage Technology, includes several applications designed to help make IBM's PCs easier to use and less costly to maintain, IBM has said.

One such application, Rapid Restore Ultra, automatically backs up data and stores it, allowing for a quick recovery if a failure occurs.

News.com's Martin LaMonica contributed to this report.