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Small businesses get server pitch

Gateway and IBM announce new servers priced around $1,000, aimed at a market that's "huge" and where the competition is fierce.

PC makers are renewing their efforts to sell low-price computer equipment to small businesses.

Gateway and IBM on Wednesday both announced new servers priced around $1,000 for small businesses. The servers--essentially beefed-up PCs used to store files--can be used as repositories for data on a network. Meanwhile, IBM also put its ThinkPad R-series notebook PCs on sale. It will offer a lower price on the portables, such as the small-business-oriented ThinkPad R32, through the middle of September.

Small and medium-size businesses have always been a big priority for PC makers. Executives at Gateway, IBM, Dell Computer and Hewlett-Packard all see the market as an opportunity to sell more computing gear and also dream of the chance to establish an early relationship with a new company that could one day grow to purchase thousands of PCs and other computing equipment.

The small-business market, especially, showed some resilience during the 2001 PC market slump and its subsequent hangover into 2002. But competition in this market is fierce, with big names as well as "white box" PC sellers fighting for business.

"It's a huge market, but there's so many players, we realized we couldn't go at it by ourselves," said Jeff Benck, director of xSeries solutions at IBM. As a result, the company works with about 900 resellers who can sell and service its hardware as well as market the hardware direct to customers.

Although IBM is selling its xSeries x205 at a low price, it has also included some high-end features with the machine, such as self-diagnostic capabilities that were previously found in the company's more expensive servers.

The machine starts at $1,049 and includes a 2GHz Intel Pentium 4, 256MB of memory, 40GB IDE hard drive and gigabit Ethernet capabilities. Customers also have a choice between Microsoft Windows or the Linux operating system. For prices starting at $1,149, customers can purchase a version of the x205 with up to three "hot swap" SCSI hard drives. Hot-swap drives can be replaced while the server is running, without the machine having to be rebooted.

The machine includes software called IBM Director that conducts predictive failure analysis, monitoring the machine's internal temperature and the health of components such as memory and issuing alerts when a failure is about to occur.

"It's got some smarts built in so that it can do some alerting and let the customer know ahead of time if something's going to happen," Benck said.

Customers can also purchase a remote supervisor adaptor, which allows them to administer to the machine remotely.

For buyers also considering a portable PC, IBM knocked $140 off the price of its relatively new ThinkPad R32 notebook, which is also designed for small and medium-size businesses. With this ThinkPad sale, which runs through mid-September, IBM is more aggressively combating players like Dell on price, a representative said.

Dell is also an active participant in the small and medium-size business market, running a number of rebates and promotions via its Small Business Center Web site. As of Wednesday, the company was offerings instant rebates, mail-in rebates and free ground shipping for various PC models. The price of a Dimension 4500PC, for example, could be reduced from $699 to $549 with a $50 instant rebate offer and a $100 mail-in rebate offer.

Meanwhile, Gateway introduced a new server model aimed at small and medium-size businesses, starting at $599. The new Gateway 920 Series server offers a wide range of processor and hard-drive choices. It starts at $599 with a 1.7GHz Celeron processor, 128MB of error-correcting RAM and a 40GB hard drive. Customers can also upgrade to a version with up to four SCSI hard drives for $799.

Gateway also introduced the 960 Series and 980 Series servers for larger jobs. The machines both offer Intel's Xeon processor for servers. They start at $1,499 and $2,499, respectively.