New IBM Blade Cuts into Small Businesses

IBM has announced a new low-cost blade server along with a set of “Business-in-a-Box” solutions targeting small- to mid-sized businesses (SMB).

The entry-level BladeCenter Express Model gives smaller companies access to IBM’s eServer technology at a lower price. The pared down server can still accommodate up to 14 dual-processor servers, but with a price tag of less than $1,000, as compared to about $2,800 for the enterprise model.

“We are dispelling the industry notion that blade servers are only a large enterprise play,” said Jeff Benck, vice president for IBM eServer BladeCenter. “We have seen phenomenal demand from our SMB client base, and our BladeCenter offering has clearly addressed their pain points.”

George Haff, analyst with Illuminata, told TechNewsWorld that this “industry notion” is one that needs to be dispelled if blade server vendors plan to broaden their market beyond large corporations.

“When blades first came out, there was such hype about blades being a new form factor of computing and there was a lot of emphasis on how many thousands of them you could put in a data center,” Haff said. “Both were messages that don’t really resonate with even a medium-sized business at all.”

Fast-Growing Segment

Despite the limited market, blades are the world’s fastest-growing server segment, growing 60 percent compounded annually from 2003-2007. Estimates say they will account for one of every four servers by 2007, according to analyst firm IDC.

As part of its strategy to woo the SMB market to blades, Big Blue also announced a set of innovative “Business-in-a-Box” BladeCenter offerings. Those offerings are designed to make it easier for mid-sized clients to implement simplified infrastructure solutions and deploy and manage resources, as well as to provide greater flexibility for clients to scale infrastructure to meet business objectives, while helping reduce their overall operating costs.

Recent IDC data shows IBM as the world’s number one blade server vendor with 43.8 percent of revenue share, gaining 18 points of share during the second quarter of 2004 and growing share faster than any other vendor, including Hewlett-Packard.

HP Entry

However, HP also announced its small business play this week — the ProLiant ML 150 dual-processor, 5U tower server. It, too, is geared toward simplicity.

Haff said both IBM and HP have been pushing the SMB agenda recently and regularly countering one another’s blade announcements. However, HP might have a slight edge in the SMB blade competition.

“Small businesses are somewhat new area for IBM,” Haff said. “HP is a more natural entre into small and medium business because of its strong presence with Windows and the ex-Compaq ProLiant line.”

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