Daily Links - 4-12-07

IBM Wants SMBs to Buy i

This one made me take notice, in part since I was suprised a bit that IBM would pick System i, which runs OS/400, to go up against Microsoft in the SMB space, and not one of it’s Linux Systems, like p. This aside, I also found the last sentence very interesting: “IBM believes it can triple the number of new customers in the first year of the new offering.”

It’s interesting because earlier in the article, they say they are lowering the entry-level system i price from ~$20,000 (according to a customer quoted in the article) to $8,000 - that’s a 250% chop. And they predict that this will result in a 3 fold, or 300%, increase in the number of new i customers. So, if a 250% decrease in price results in a 300% increase in unit sales, in economics lingo, IBM expects price elasticity on the i to be just a tad more than 1. This seems pretty conservative given that most observers consider business technology buyers to be very price sensistive. Thought about another way, IBM seems to be admitting that the i will be (or at least will be perceived to be) an imperfect substitute for a Microsoft SMB server. How about you? Are you tempted?