IBM Bundles Software with Blades to Push Sales

by Timothy Prickett Morgan

Over the past two years, IBM has come from behind in the nascent blade server market to take more than half of the market share. Market share is often fleeting in a young market--as blade server inventor RLX Technologies, which late last year left the business, and as Hewlett-Packard, which lost the pole position to IBM, have also learned. IBM wants to keep its lead, and it is going to sell blades as configured systems to do it.

This only makes sense when you think about it. The concept of a blade server is one that embodies compactness and integration. Instead of building racks of servers with lots of wires hanging out of them to connect them to each other, to storage, to end users, and to various networking equipment, a blade server puts server processing power, networking, and switches linking all of the parts of an n-tier system inside one chassis. Instead of having wires to link them together, the blades and the switches link into a shared backplane, which is just an external IP network that has been internalized inside the chassis. Add a mix of different blade types and sizes, mix in a few operating systems, sprinkle on some system management software, bake at 350 degrees, and viola, you have a blade system that looks like a network in a box.

This integration is useful, but companies do not use raw servers. They have to configure them with their operating systems, middleware, and application software to make them useful. This is a big pain in the neck, which is why PCs today are sold with their operating systems and core application software pre-installed by the vendor. So why not do the same thing for a blade server?

Such a simple idea has, in fitting with IBM's current naming schemes for products, a name that sounds more like the title of an IBM executive than an integrated, easy-to-buy and easy-to-use product: the IBM eServer BladeCenter Business Express. You and I might call them BladeCenter Bundles, but that would be too obvious, apparently.

The BladeCenter Business Express bundles start with a BladeCenter chassis, which customers have to buy for a little under $2,000. Then, IBM preconfigures a specific operating system and middleware or groupware on the blades and sells it as a ready-to-go, turnkey system. Right now, says Elaine Lennox, who is vice president of SMB sales for IBM's servers and storage products, the BladeCenter Bundles are being offered on the Xeon-based HS20 blade servers running either Microsoft Windows or Red Hat or Novell Linux. But customers who want to run AIX or Linux on the PowerPC 970-based JS20 blade servers or Windows or Linux on the new LS20 Opteron-based blades (which IBM has not really said much about publicly, for some bizarre reason) will be able to get bundles as well.

IBM is loading software on these blades that in essence turns them into appliances. One blade, called the Rapid Foundation for E-Business, comes loaded with WebSphere Application Server Express and DB2 Express and comes in a Windows or Linux flavor. Another blade is called the Process and Business Express blade, and it comes with WebSphere Express plus WebSphere Business Integration Server, IBM's middleware for orchestrating the interchange of data between distributed applications. There is also a collaboration blade that comes with WebSphere Express and the WebSphere Portal server, and a "collaborative workplace" blade that comes with this same software plus the new Workplace Services Express groupware software that IBM has created in Java to run on top of WebSphere as an alternative to its Domino middleware. Lennox says that IBM is working on quite a few other specific application blades, and is looking at other B2B and e-commerce, data analytics, Domino and Exchange messaging, Citrix Systems host connectivity, and VMware virtualization blades. IBM is also looking to tailor blades specifically for certain industries, beginning with the healthcare and retail industries.

The BladeCenter Bundles will be sold through IBM's master distributors, who in turn will peddle them to their downstream partners, who in turn sell to customers. Avnet is ready to start selling the bundles right now, and Agilysys will be ready on June 1. Arrow Electronics, IBM's third and final master reseller, is coming soon. Resellers are being encouraged to sell a complete solution built from these preconfigured blades. Lennox says that pricing will vary depending on the solution and partner promotions and discounts, but that a solution comprised of the BladeCenter chassis and four to six configured blades will sell for around $30,000. Pricing for additional blades varies from $4,500 to $9,000. IBM is, of course, encouraging SMBs to lease the solution, which gives IBM and resellers some profits and lets SMBs preserve their cash flow. Lennox says that IBM has tweaked the Financing Advantage program such that the lease and loan programs now have a 90 percent approval rate for SMBs, and that IBM and its partners can come back with a quote within an hour.

The important things for IBM are to boost sales of blade servers among SMB customers, who accounted for about 30 percent of IBM's BladeCenter revenues last year, and to take out the work that either its techies or those of resellers do to configure blade servers. Lennox says that the methods IBM has created to create these bundles take out 70 percent of the installation and customization work that they formerly had to perform. When time is money, that saved time ends up being saved money and profits for the resellers.