Vizard: Dell, IBM and HP say their survival depends on SMBs. That's all well and good, but if they really want to make it with that market, first they have to get out of their own way. The three major hardware vendors, Dell, IBM and Hewlett-Packard, have been spending an inordinate amount of time lately telling just about anybody who will listen that their future growth is pretty much totally dependent on how they fare in the small-to-medium-sized business market.
And yet when it comes to the traditional SMB customer, the big three hardware vendors are pretty much the IT equivalent of the three blind mice.
The one that makes the most amount of noise about the SMB market and is probably at the moment the least effective is IBM. IBM CEO Sam Palmisano has said that this segment of the market will be IBM’s largest within the next four years, and to that end the company has created a new Business Systems Unit within its hardware business unit to focus exclusively on SMB customers.
You could think of this business unit as a sort of junior IBM. All the company needs to do is bring back Charlie Chaplin as the mascot for this division and people would instantly know what IBM was on about. Unfortunately, it will be a number of years before IBM actually retrains its people to really understand the SMB customer. Culturally, IBM salespeople still talk over the heads of most of the SMB customers, the majority of the products are still relatively too complex for SMB customers with limited IT staffs to manage and when IBM finally does notice a particular SMB customer about a dozen IBM people that have never met before show up at the customer’s location at the same time only to discover that each of them is pushing a half dozen products that compete with each other. And, of course, the rest of IBM is not ceding all relationships with SMB customers to the new SMB hardware group, so you can still expect to get multiple phone calls from IBM salespeople that have no idea what the other salesperson just said.
There is no doubt that IBM is committed to fixing all this at the highest levels of the company, but the changes that are required will take years to work themselves through the culture and, more importantly, through the business processes of one of the largest companies on earth.
In contrast, HP has always maintained that it has a better handle on the needs of the SMB market. But just this week HP CEO Mark Hurd conceded that in the United States, the company still has a long way to go before it could claim to be the market leader in this space.
HP has gained on IBM in server revenue with help from SMB spending, according to a recent report from IDC. Click here for the story.
The core issue facing HP in the SMB market isn’t the quality of its products but rather an inability to get out of its own way. There are so many different product divisions trying to run as independent subsidiaries within HP that most SMB customers despair of working with the company and its partners.
Most SMB customers, after fighting tooth and nail to get the IT budget approved in the first place, don’t want to hear that it will take weeks and months to get the products they need at an agreed price for the overall package because four or more corporate vice presidents have to first agree on the terms and then find out if they can actually ship the products on time.
This brings us to Dell, which wins a lot more business in the SMB segment than it likes to admit by default as opposed to merit. Dell does a great job of making its products available, but most of its relationships with customers are transactional rather than strategic.
Dell has slashed 3,200 employees from its payroll in the last eight months as it struggles to return to profitability. Click here for the story.
Dell does not lead the discussion when it comes to figuring out what software to run on its Dell hardware the way IBM and HP can when they finally focus on what the customer actually needs. The problem is that Dell is a place you go to fulfill your hardware needs versus trying to actually figure out how to get the most value out of your IT investments. And if you do buy from Dell, chances are good that you got a good price, but you’re a little apprehensive about the quality of the product over the long haul and the customer support that goes with that equation.
All three vendors are diligently working on trying to do a better job in the SMB space but truth be told, the SMB customer has a lot of options beyond the big three players. This may account for why the big three see such an opportunity to grow in this segment because it’s not like SMB customers have not been buying IT equipment all these years. They have just in a large way voted with their feet by deciding to purchase IT products elsewhere.
If the big three hardware vendors were car companies in the SMB space, Dell would be roughly equivalent to Honda, HP would be Lexus and IBM would be Mercedes. A lot more people buy Hondas than a Lexus or a Mercedes, but if all things were equal in terms of cost to buy and own, Lexus and Mercedes would have a much bigger share of the car market. So too would HP and IBM if they could actually do what they say they plan to do.
In the meantime, the good news for the SMB customer is that it’s a buyer’s market right now, so don’t be afraid to make your vendor jump through hoops to get the business. They gladly will.
Michael Vizard is Senior Vice President/Editorial Director for Ziff Davis Enterprise. He can be reached at michael.vizard@ziffdavisenterprise.com.
