IBM's new SW pricing to target mid-market

SOMERS, N.Y: IBM Corp has said it would introduce new, lower pricing schemes and packages for its software as it tries to appeal to businesses with 100 to 1,000 people. IBM said the plans are part of a strategy to create more flexible pricing for customers and focus on industry standards, which it calls "on demand computing."

"We changed the pricing so that we are now pricing on a per user basis, which we think allows these types of customers who do tend to be smaller, to start ... inexpensively," said John Swainson, general manager of application and integration middleware. IBM said it has less than 10 percent of the mid-sized market for its middleware, or WebSphere software.

WebSphere is IBM's brand name for middleware, or software that connects the back end of a company's systems with its front end. Developers use WebSphere application server software as the foundation on which they build their programs. IBM WebSphere-Express application server starts at $25 per user, the company said. Usually, the software is priced based on the number of microprocessors at a company, Swainson said. Under those terms, it sells for $2,000 per microprocessor.

A medium-sized business might have one computer server with two processors, meaning it would have to spend $4,000 for the software. If the company has only 100 employees, however, the $25 per user price would total $2,500 and be a cheaper option. IBM will sell less expensive versions of WebSphere Application Server, WebSphere Portal, and WebSphere Business Connections.

The company also will release a version of its DB2 database software to customers in the first quarter of 2003, it said. Available on the Linux, Windows and Unix operating systems, DB2-Express will start at $1,000, IBM said. Lastly, IBM said it has a managed service offering to provide security for portals, extranets and other business applications.

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