IBM’s newly released software portfolio for small-and-medium sized businesses (SMBs), could challenge the dominance of Microsoft’s Windows Small Business Server in the SMB market according to experts at this weeks Loutsphere 2008.

IBM Foundations will be a line of small business software servers based on Linux, installed on-premise, and built on IBM’s Express Advantage program to ensure ease of use and installation. Referred to as a “one-stop-shop-solution” for SMBs, Foundations is likely to include the Lotus Domino mail and collaboration platform, file management, directory services, firewall, back-up and recovery, and office productivity tools.

IBM also announced Bluehouse, a beta web-delivered service that provides extranet services to SMBs to allow them to collaborate securely. Bluehouse will allow small businesses to share contacts, files, project activities and interact with chat and web meetings.

The launch of the products intends to take advantage of the fast growing SMB market, versus the increasingly consolidated enterprise market, said Michael Rhodin, Lotus Software general manager.

Robert Anderson, senior Gartner analyst in small and midsize business software, believes Foundations and Bluehouse could be disruptive, offering “a price to value and solution offering ease of use and management edge”, especially with IBM’s recent acquisition of Net Integration Technologies. The new acquisition, expected to close in the first quarter of 2008, will bring with it 2600 channel partners, according to Rhodin.

“They have a chance to finally disrupt Microsoft’s dominance with its small business server, and at least take a chunk out of the emerging sphere countries, such as China, Brazil and India, whose users have real needs for straight forward solutions that do not require lots of management and are yet to be influenced by Microsoft,” Anderson added, pointing to IBM’s announcement that they will be leveraging China Telecom, a trusted advisor to many Chinese businesses, to deliver Foundations.

But IBM needs be shrewd in its marketing efforts, Anderson cautioned, advising the firm to concentrate on raising market awareness on the solutions’ ease of use and potentially lower cost.

Anderson said that until now, IBM’s SMB solutions had disappointed. “Once the market sees IBM attacking with confidence, not with trepidation, then those that are sitting on the fence will give them strong consideration and perhaps migrate,” Anderson added.

Burton Group analyst, Karen Hobert, said IBM is obviously trying to offer a number of different choices in the SMB market, pointing to the firm’s offerings in on-premises installed software, web centric software-as-a-service, its data centric hosting model, and now with Foundations, appliance based, pre-loaded plug-in capabilities.

However, although IBM offers different options to SMBs in terms of delivery models, Hobert believes SMBs could potentially find it confusing considering the capabilities given with each of the models are at odds from each other. For example Bluehouse does not have email capabilities in its release.

SMBs want straightforward solutions, like those which Microsoft offers, Hobert explained, “So all you have to do is pick a model for you and you will get what’s on offer".

But Rhodin said Bluehouse is just the beginning of a set of services out there and firms should expect more capabilities over time, and if Bluehouse is used in combination with Foundations then it does have email capability.

Anderson indicated that launching the product before it had fully fledged capabilities could be a wise move. “The problem in the past is that IBM has been too calculating of what the end scenario is, and in trying to calculate every possible business usage, they have held back on delivering products to the market," he added. "In a web 3.0 world, you create a product; you get it in the market and then let the users guide the product where it needs to go. A lot of the time it takes it to places that you never put in the product plan, and that is all good.”