IBM servers: One Umbrella Brand

Everybody seems to be on the ‘e’ bandwagon. Sun is

positioning itself as the dot in the dot-com, while HP has its e-services

initiative. But with IBM it has been sheer confusion. Its computer brand names

have been an alphabetical soup. For decades they have been given names such as

RS/6000, AS/400 and S/390, and the only thing IBM has managed to do, is confuse

its customers. Also, in an endeavor to create distinct identities of the brands,

IBM has been spending millions of dollars on separate advertising campaigns for

these products over the years. Today, all this seems a big waste.

In the next 18 months, IBM intends to migrate from its

multiple e-server brand strategy to a single umbrella brand: e-servers. The

company is already rebranding its entire line of corporate computers as

e-servers.

For IBM, creating a single brand strategy has become a

pressing need. The past years had other vendors growing faster than IBM.

According to experts, the reason for this was the simple message by IBM’s

competition. So, even if IBM addressed only part of the customers’ problems,

they were moving to IBM’s competition. Sun, Compaq and HP’s messages were

clear, while IBM’s message was perceived as complex–each brand having a

different message. Also, each of the server brands had a different sales force,

adding to the customers’ confusion. Since the functions of the server brands

often overlapped, the same customer would see IBM’s sales force trying to sell

different brands for the same problem, again adding to the confusion. So, rather

than compete with its rivals, IBM’s sales force was busy competing among

themselves. This was creating problems for IBM even as its rivals were gaining

more mind share. Of course, IBM has made a lot of headway in the ‘e’ market

space. Critics have said that the organization of the company’s server

business had been fragmented, which undercut a lot of its efforts there.

To take on its rivals, IBM unleashed its first strategy: the

much-hyped e-business campaign. The next strategy was to complement this

e-business campaign with the e-server strategy.

Edward Orange, director, marketing and strategy, enterprise

systems group, IBM Asia-Pacific, says, "Though Sun has been positioning

itself as the dot in the dot-com, its positioning has been only in the server

business and not the whole e-business infrastructure." An important tool

with IBM in the e-business infrastructure will be its ability to have

applications run on its servers. The company’s seriousness to do away with the

existing brands is seen in its $75-million spend on marketing the



e-server brand by the year-end and ramping up the advertisement budget to about
$250 million for the next year. Another significant advantage of the e-server

strategy will be the unification of its sales force around the e-server

platform. IBM’s competition will now have to compete with IBM as a whole, not

its fragmented parts as earlier. AS Srinivas, manager, computing product

research, IDC India, says, "The dual strategy seems to be to stop confusing

the customer, and we don’t care which part of IBM wins as long as it’s not

Sun, HP or Compaq."

Not just re-branding

Not just re-branding

Industry people are calling the whole exercise a mere

rebranding strategy of existing products. IBM, on the other hand, is trying to

emphasize that these are an entirely new breed of servers for e-business, built

from ground up. According to Orange, "E-servers represent a whole new

approach to doing business that makes it simpler for businesses to deploy

different elements of their Web infrastructure and integrate hardware

technologies, software and services across server types, regardless of the

operating system." According to IBM, the whole e-server range has been

built under the Project Mach 1 initiatives. The underlying assumption has been

that the Internet and the e-commerce wave, the whole paradigm of buying servers

has changed. Says Orange, "For IBM it’s been back to basics."

However, the fact remains that the entire e-server family is

the same as IBM’s earlier server brands. But with one common platform, IBM is

bringing its high-end mainframe technology throughout the server line. For

example, he says, all the new e-servers will enable users to pay only for

processing power they need, "turning on" extra processors and paying

for that extra computing horsepower only when they need it. That’s a pricing

model similar to the one Hewlett-Packard described when it introduced its latest

server, "SuperDome".

India–different affair

Unlike the global market, where the products had high brand

equity, in India it’s the "IBM" brand that sells. Says Srinivas,

"The various brands are still hazy among the Indian consumers and people

buy the IBM brand." So like the global phenomena, IBM brands even in India

have led to confusion and many users are still not clear about what the various

brands stand for and the functions they offer. Sun has taken advantage of this

and developed a better mind share with its clear ‘dot in the dot-com’

message. According to IDC, Sun was number one in the non-SIAS (standard Intel

architecture servers) segment in 1999-00 with 29.5% market share while IBM was

number two with 27.2%. Again, the bigger advantage



for IBM would be in terms of
unification of the sales force under the e-server brand. They would then stop

competing among themselves and take on Sun for the top spot.

YOGRAJ VARMA



in New Delhi