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IBM eyes SMBs with entry-level System i boxes

IBM is rolling out two System i servers aimed at small and midsized businesses that feature user-based pricing.

CAMBRIDGE, Mass. -- IBM has rolled out two midrange servers from its System i line, previously the iSeries, which are aimed for small and midsized businesses (SMB) with user-based pricing and starting at about $8,000.

The new servers are the i5 515 Express and the i5 525 Express. The 515 is the lowest priced model, starting at $7,995 for five users. Additional licenses cost $1,250 for every five users. The i5 525, meanwhile, starts at $34,900 for 30 users. The new models piggyback off two iSeries boxes IBM released in October that also had user-based pricing; those were priced at $14,000 and $26,000.

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The basic configuration for the 515 includes one Power5+ 1.9GHz processor, 1 GB of memory, two 70 GB disk drives, a 36 GB 4mm tape drive, i5/OS for five users and a three-month software maintenance contract.

The 525 starts with a Power5+ 1.9GHz processor, i5/OS for 30 users and a one-year software maintenance contract, but no memory or disk drives.

System i for SMBs
"Many midmarket firms have moved to a Windows environment," said Steven Solazzo, IBM general sales manager for SMBs. "Our research has indicated that the primary reason is the initial cost."

At a press and analyst event in Cambridge on Tuesday, IBM's System i marketing vice president, Elaine Lennox, argued that one System i box was better than a bunch of x86 servers. She pointed to a pyramid of six Dell Inc. servers stacked up next to one System i and said that all of the applications running on all the Dell servers could fit onto a single System i.

But IBM didn't harp on that point too much; after all, it has its own line of x86 servers, the System x.

Wayne Kernochan, a senior IT analyst at research firm Illuminata Inc., said he was impressed with IBM's message on total cost of ownership ( TCO) coming down to smaller businesses. But he added that IBM needs to focus more on the developer world so that System i programmers will continue to be available.

"I'd like to see them deal more strongly with the development environment," Kernochan said. "I think they have something to say there."

In recent years, IBM has worked at allowing users to run outside applications on the System i without having to port them to i5/OS, the System i operating system. It can run AIX and Linux applications in a logical partition or use an integrated Windows server card that plugs into the System i hardware to run Windows applications.

During a panel discussion following the event, IBM business partners and customers talked about the new System i's benefits and difficult selling points. Taber Alderman, president of Systems Implementation Inc., a System i systems integrator in Troy, N.Y., said about 95% of her customers are new to the business, and so virtually all of her competition comes from systems integrators selling Windows servers.

She said that existing System i customers are the platform's best salespeople, but liked the idea of a more affordable, scaled down version of traditional System i boxes. Some of her customers don't even have a legitimate IT staff and so having a server that requires little maintenance is critical.

"This is significant for us because some companies don't have a CIO," she said. "They have Aunt Mary putting the tapes in every night."

That is the kind of situation that Joel Myerson, president of Safety Inc. in Peabody, Mass., is in. The company, which is a distributor of safety equipment, has 12 employees in total, so having a server to run the business with minimal maintenance is important. The company's IT strategy is to do as much as it can with a small support staff and grow the business without changing the underlying server platform. Myerson said that System i has allowed him to do that. The company just recently upgraded to a System i5 520 in December 2005 and plans to have it running for a long time.

Myerson's hope now is that software companies follow hardware manufacturers' lead and give customers the option to buy small and grow.

"They really haven't scaled their pricing to the same way the boxes are being scaled," he said.

Let us know what you think about the story; e-mail: Mark Fontecchio, News Writer.

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