PARTNERWORLD - CEO: SMB to become IBM's 'largest industry'

The head of IBM predicted his company's main vertical business will become small to midsize businesses within a couple of years.

The head of IBM expects the company's small to midsize business (SMB) operation to become the vendor's biggest industry focus within a couple of years.

"In two to three years, SMB will be the largest industry for us," IBM chairman, CEO and president, Sam Palmisano, said during his keynote address at IBM's PartnerWorld conference in St. Louis. Financial services has long been IBM's number-one industry in revenue terms.

Palmisano described the SMB market, valued at $US487 billion, as the biggest IT growth opportunity in the world today. The global market is currently growing at 6.5 per cent annually. Forty-seven per cent of IBM's SMB revenue was currently driven by the vendor's business partners, he said.

IBM's most significant announcement at PartnerWorld focused on the expansion of its Express Advantage program aimed at companies employing between 100-1000 staff.

Launched at last year's PartnerWorld in Las Vegas, the initiative was previously limited to the US and Canada, but was now being rolled out to 23 countries in Europe, Asia-Pacific and Latin America, IBM said. Express Advantage wraps up IBM's Express range of products for SMBs with the vendor's financial services. IBM also unveiled new Express server, storage and software offerings.

Looking at IBM's business as a whole, Palmisano described the vendor's fiscal 2006 profit mix as a much more balanced portfolio, and therefore much more stable when compared to financial results in previous years. Quoting pretax income figures for fiscal 2006, he said IBM's business split was 23 per cent systems and financing, 40 per cent software and 37 per cent services.

"2006 was the result of multiple years of strategic shifts," Palmisano said. "We made a series of bold bets and they all came together last year." Those bets included the vendor's focus on service-oriented architecture (SOA), blade servers, managed business process services, virtualisation and the coming together of software and services, he said.

As IBM continues to acquire companies, Palmisano reiterated that the company made its purchases in order to add strategic capabilities to its existing product portfolio, not to consolidate markets.

"We're not trying to become a GE [General Electric Co.], a holding company," he said. "That's not our strategy, it's all about innovation, integration and collaboration."

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