Big Blue Targets Small Business with p5 Server

IBM continued its extension to the small and medium business market this week as the company unveiled its entry-level, Unix-based p5 510 server, priced at just under US$4,000.

The company is matching similar moves by rivals Hewlett-Packard and Sun. All are responding to demand for more powerful resources from smaller businesses, which are a growing force in the market.

With the p5 510, IBM promised Power5 performance and advanced virtualization capabilities in an entry-level, “aggressively priced” Unix server.

Entry Point

“With the introduction of the p5 510, IBM is taking advanced AIX 5L and Power5 technology and making them available in an aggressively priced entry-level system,” said a statement from Karl Freund, vice president, IBM eServer pSeries. “IBM’s commitment to capture the growing opportunity in high-volume and channel-based Unix server sales takes a great leap forward with the introduction of this innovative server.”

IBM said the p5 510 — packaged in a compact, slim form factor — would provide high-end feature options, including use of IBM’s Virtualization Engine technology and micro-partitioning, which allows support of Unix and Linux applications simultaneously.

Claiming superiority over comparable offerings from HP and Sun, IBM said the two-way, rack-mountable p5 510 would support AIX 5L Versions 5.2 and 5.3, as well as Linux.

The company described the entry-level server as ideal for business-critical and replicated branch applications in retail, wholesale, distribution, financial services and other businesses. It will be available February 18, with a starting price of $3,967 with 1.5 GHz Power5 processor, 512 MB of memory, disk drive and three-year warranty, but without operating system.

Smaller, Faster Market

Yankee Group senior analyst Laura DiDio said that since the most recent economic and IT downturn, companies such as HP and IBM are embracing the smaller markets, which are proving to be fruitful.

“Right now, IBM is trying to tap in and mine the deep vein of SMB businesses that will follow their enterprise counterparts,” DiDio told TechNewsWorld.

Not only is the SMB market base growing, she explained, but vendors are also finding that the smaller companies are more agile in their purchasing.

“Specifically because of their smaller size, they can know much faster and act on their purchasing decisions much more quickly,” DiDio said. “They will buy if the price is right.”

DiDio also said that IBM’s p5 510 was a response to HP’s successful bundling of aggressively priced servers from Microsoft. IBM’s brand may help the company achieve its goal of making up sales lost in other areas. “Every little bit helps,” she said.

RISC Response

Brian Richardson, Meta Group program director, told TechNewsWorld the new p5 server represented the first RISC processor platform that would be price-performance competitive with industry standard servers running on AMD and Intel processors.

And IDC analyst Jean Bozman said despite a decline in revenue from Unix servers shipped last year, there was actually an increase in the number of units shipped.

“There is a volume Unix server market,” she said. “There is demand for volume RISC servers.”

Bozman explained that as smaller businesses add capacity and applications, many are looking to lower-priced servers such as the p5 510 to deploy server farms, clusters and grids.

Bozman reiterated that despite a slowdown in revenue from Unix servers, the low-end markets were still purchasing them in significant numbers.

“The number of [Unix] units shipped and the form factor, which is mixed, are substantial,” she said.

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