IBM's Continuing Focus on SMB Storage

If you were asked to name the company that has been most identified with the enterprise class IT space for decades, the name IBM would come to the top of your mind. Yet Sam Palmisano, IBM’s CEO, has demonstrated a continuing special focus on the small to medium business (SMB) space. Why is that?

The answer is the same reason that other IT suppliers have found — that SMBs are where the money is! While SMB companies may be small individually, in aggregate they offer a large business opportunity. IBM has revealed research that suggests the storage opportunity alone in the SMB space will be $11.5B in 2008 and is expected to expand at a compound annual growth rate (CAGR) of 5.6% between the years 2006 and 2010. According to IBM, that growth rate is one and a half times faster than that expected among large enterprises and non-businesses (i.e., the public sector).

In fact, Mr. Palmisano has stated, "If we don't put a special focus on one of our biggest customer segments (SMBs), which is now almost 20 percent of IBM and growing fastest of all, we will lose it." Strategically, IBM viewed its SMB challenge in 2006 as investing and building momentum while 2007 is the year of investing and delivering double-digit growth. So it comes as no surprise that IBM's storage organization has responded to the challenge with a number of product introductions throughout the course of the year. 

The disk array product family that the company aims at SMBs is the DS3000 family. The new models DS3200 and DS3400 were announced in January and enhanced in April. The April announcement also focused on tape library models and tape drives — especially those that can accommodate the fourth generation of the Linear Tape Open (LTO) media, i.e., LTO4. IBM’s SAN switches and the DR550 archiving solution have also received suitable attention during the course of the year. 

The company’s most recent (August 28) announcement featured a new member of the DS3000 family — the DS3300 — which enables IP SAN-attach configurations using iSCSI interface options. That sounds like a mouthful, so let’s put it in perspective: The DS3200 is essentially designed for direct-attached storage (DAS) for Windows environments using System x servers. Windows is big in the SMB space so this appears a well-targeted solution.

The DS3400 can also do DAS, but its real home is Fibre Channel (FC) SAN-attached configurations for System x and BladeCenter servers so its target accounts are larger SMBs that are willing to invest the time, money, and management necessary for a FC SAN solution. For those companies that need a SAN but are not willing to go to the expense of deploying a FC SAN, and for companies that currently have a FC SAN but really want to move in the direction of an IP SAN, the DS3300 fills the bill. 

Solid products are a necessary part, but not a sufficient condition for selling to the SMB storage space. As with other storage vendors that sell to the SMB market, IBM relies on an indirect channel selling strategy. IBM has built a number of IBM Express Advantage storage offerings that target mid-size markets and an Express Seller program where channel partners can sell the company’s storage products in an autonomous fashion. One example of how IBM is helping channel partners (and its own case as small business vendor) is by offering a 3 year warranty on DS3000 family products, which is a lot better than the one year warranty many competitors offer. 

IBM has a lot going on in its SMB strategy; A well-trusted brand name (which also includes the ability to service products worldwide and service is a key decision criterion for knowledgeable businesses of every size) is one point, along with a broad range of products, financial stability, and continuing R&D investments. That does not mean that succeeding among SMBs will be a slam dunk for the company. 

IBM faces strong challenges from other large suppliers as well as quality smaller players that may not be household names but inspire confidence and respect among their respective channel partners. Overall, we believe the new DS3300 provides IBM an interesting weapon that should make the battle for SMB storage an interesting arena for both suppliers and small business customers. 

© 2008 Mesabi Group. All rights reserved.

About the Mesabi Group
The Mesabi Group (www.mesabigroup.com) helps organizations make their complex storage, storage management, and interrelated IT infrastructure decisions easier by making the choices simpler and clearer to understand.