IBM System I goes entry-level

When IBM released the AS/400 in the early 1990s it was never intended to be an option for small business. But a decade and a half later, the remnants of the AS/400, the System I, has made its way down to that segment.

IBM has made, what it calls a “radical” move and is offering an all-in-one system called System I Express for businesses with five to 40 users, as well as a second system for the mid-market, both featuring the Power5+ processor.

Guy Paradise, System I SMB offering manager for IBM, based in Rochester, Minn., said the company wants to take the value in System I technology and the operating system and make it more affordable.

The two models under System I will start at $7,995 and include five user licenses. Additional user licenses will cost just over $1,000 per five users.

“This is available to the smallest business, really,” Paradise said. “It is us packaging up the real value and moving it into the entry space. We are taking all the performance and the power and making it more affordable.”

IBM will integrate its DB2 database, Websphere, and System I security into the offering.

One of the main reasons for this move is to provide an alternative to Windows, Paradise said.

The mid-market 525 model will have unlimited options and will more than likely depend on the applications the customers run on the machine.

“Small businesses have a high propensity to finance the solution without if they do not have the extra cash flow. IBM financing can turn the initial $8,000 cost into a monthly payment that can be $200 bucks a month and can form into any budget,” Paradise said.

Also, the typical life cycle for System I and AS/400 system customers reach seven years compared to Wintel systems that average three years.

“Our customers leverage these systems for a lot longer than the Intel systems. So from a budget perspective the cash outlay is a significant server purchase, but over time it is better than the Intel server purchase,” Paradise added.

Through the System I initiative, IBM has updated its Vertical Industry Program (VIP) to further position System I in the channel community. VIP is designed to serve customers in select sub-verticals by working with local ISVs and business partners who have expertise in areas such as retail and manufacturing.

“If you look at System I sales they are business solution deals and the core business apps and typical focus is in vertical niches such as frozen food distribution and auto parts for after market sales. So there is (high margin) implementation services and deployment involved. Additionally they may need Domino or other collaboration software to deliver this type of solution to SMB,” Paradise said.

The VIP program is about moving more resources to the partner base and working together on vertical niches to drive demand generation and awareness, he said.

There are currently 130 solution providers signed up worldwide in VIP. Paradise expects the number to grow dramatically.


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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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