IBM Rolls Out Lowest-Cost Servers For Analytics, Cloud In Small Business Push

While based on the same Power7+ processors that run IBM’s mainframe servers as well as the Watson supercomputer that is now aiding research at Rensselaer Polytechnic Institute, the new Power Systems for Small and Medium-Sized Business are priced as low as $5,940, targeted directly at competitors from Oracle Corp. (NASDAQ:ORCL), the No. 1 database company and Hewlett-Packard Co. (NYSE:HPQ), the No. 1 computer company.

“We are very conscious, obviously, of price,” said Steve Sibley, director of Power Systems Offering Management in IBM’s Austin, Texas, office. “We have a lot of clients who dabble in the public cloud, but we’d like to show them how they can have more valuation when they control entire systems.”

The Armonk, N.Y.-based company is launching the small-business offensive 10 months after introducing its PureSystems approach to selling servers and services, which says all future IBM products will operate with whatever a customer already owns or operates. The goal is to entice new customers as well as assure old ones their current non-IBM products won’t become obsolete immediately.

Sibley declined to say how much revenue IBM expects from the new products, which also include data analytics based on sophisticated software IBM bought over the past decade by acquiring Canadian software giant Cognos as well as statistical data pioneer SPSS of Chicago.

Sibley said small businesses, such as a chain of travel agencies, might gain substantial business advantages from the new software, much as giant enterprises have used analytics from others such as Oracle Corp. (NASDAQ:ORCL), the No. 1 database company, for years. It could better understand customer preferences or select packages that appeal to consumers more easily, he said.

IBM also said it will work with the two biggest technology resellers, Avnet Inc. (NYSE:AVT) and Arrow Electronics Inc. (NYSE:ARW), to sell the entire product line.

By moving down the technology chain, IBM is taking aim squarely at HP, of Palo Alto, Calif., as well as Dell Inc. (NASDAQ:DELL), the No. 3 PC maker, which has been targeting the small business sector for higher-end services and software but doesn’t have the same portfolio.

Neither does China’s Lenovo Group (PINK:LNVGY), the No. 1 PC maker, which acquired IBM Personal Computer Co. but hasn’t entered the high-end server market yet.

One reason IBM can offer the low-cost server is that its IBM Microelectronics division is the world’s largest in-house chipmaker, providing for all IBM’s needs. Others require products mainly from Intel Corp. (NASDAQ:INTC), the No. 1 chipmaker, and Advanced Micro Devices Inc. (NYSE:AMD).

“That gives us a significant advantage,” Sibley added.

IBM also will add extra storage via its Netezza platforms, which also compete against Oracle and HP products, and will provide what it calls SmartCloud Storage Access. Here, the offering will compete against Amazon Web Services from Amazon.com Inc. (NASDAQ:AMZN), the No. 1 e-retailer, which last week said it had 2012 revenue from cloud services exceeding $2 billion. Amazon has won business from companies like Netflix (NASDAQ:NFLX) as well as universities and muncipal governments.

As part of its PureServices line, IBM said it will offer a PureData System for Analytics, which can crunch data faster and add the IBM analytics onto whatever software the customer already owns. In turn, there will be a link to smartphones and mobile platforms used by businesses, so that end-users can tap into a system remotely but be assured data will be secure.

IBM also said its financing arm will offer 12-month deals with no interest to encourage sales.

IBM previously reported full-year net income rose 5 percent to $16.6 billion, or $14.37 a share, as revenue eased 2 percent to $104.5 billion.

Shares of IBM closed Tuesday at $202.79, down $1.00. With dividends, they’ve gained 7 percent in the past year.