FT.com / Companies / IT - IBM to vie with Microsoft for business market

FT.com / Companies / IT - IBM to vie with Microsoft for business market

IBM to vie with Microsoft for business market
By Richard Waters

Published: January 21 2008 16:48 | Last updated: January 21 2008 16:48

IBM is to take another stab at breaking into one of Microsoft’s core markets, with the announcement on Monday of new software initiatives aimed at small businesses.

Slowing growth in the “enterprise” market of big companies and governments has prompted a number of tech giants to look down-market in search of new opportunities. Most notable is SAP, which is trying to break out of its traditional large-company market with its Business By Design line of online services. Quoting research firm IDC, IBM said the IT market for small businesses is worth $400bn a year.

However, the push takes these companies into head-on competition with Microsoft in one of its most entrenched markets, thanks to the near-ubiquitous use of its desktop software and an established network of partners who sell and support its products.

IBM’s plans include a line of server software products for the smallest businesses, or those with between five and 100 employees, a type of customer that IBM has never targeted before.

They also involve a series of “software-as-a-service” (Saas) offerings for slightly bigger companies. With Saas, a tech company takes over a computing function on behalf of a customer and delivers the results over the internet as a service, usually in return for a monthly fee.

IBM has used a series of acquisitions to support its push into the small business market. Last Friday, it announced the purchase of Net Integrations Technologies, a 60-person company in Toronto, whose software will sit at the heart of the new small business server. Other acquisitions have included WebDialogs, a web conferencing concern, whose software is to be embedded in the new Saas initiative.

Known as IBM Lotus Foundations, IBM’s server line will build on the company’s email and collaboration software business. Though no pricing was disclosed, IBM said it would set the level below Microsoft’s Small Business Server, its own entry-level server product for small businesses. The first product to be announced includes a package of basics such as email, data back-up and recovery and office productivity tools.

The small-business software push follows IBM’s announcement last year of a package of productivity applications, known as Lotus Symphony, that directly challenge Microsoft’s Office suite.

With Symphony, IBM hopes to create a “front end” interface through which users can access its other software tools.

Copyright The Financial Times Limited 2008