IBM Hones Hardware Edge

"It's my understanding that SMB spending has been pretty aggressive on this IT spending cycle," he says. "System i hasn't benefited during that time. Obviously, they need to make that more of a priority."

Kim Caughey, a senior equity research analyst with Fort Pitt Capital Group, which also holds IBM shares, says that "the SMB market would be a good target for the i series, but it's going to be a tough row to hoe, and that's because there's so much competition out there for department-sized servers."

IBM shares closed Friday down 6 cents to $97.45.

The company has named Marc Dupaquier, vice president of worldwide marketing for IBM's highflying software group, to lead the new SMB division in hardware, Djurdjevic says.

If Dupaquier is making the jump to hardware, it could bode well for System i. The company's software group had another stellar quarter, growing at its fastest rate in five years and boosting revenue by 14%, or 11% at constant currency.

Mark Shearer, general manager of System i, declined to comment on any speculation about a new SMB division in hardware, but he outlined new strategy for System i that appears to support the idea, with marketing an important component of success.

System i was introduced in 1988 as the AS/400, renamed the i Series in 2000 and renamed again as System i in early 2006. The system is preloaded with storage, server, software, security and networking in one box and is designed to run an entire business's operations.

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