IBM's Continuing Focus on SMB Storage
By David G. Hill, Mesabi Group
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
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
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
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
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
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.