IBM Announces Two Major E-Commerce Initiatives

IBM, which announced a weaker-than-expected fourth quarter today, has unveiled two major e-commerce initiatives.

First, IBM announced that it is setting up a $500 million (US$) fund for e-commerce ventures. The fund is part of a larger $1 billion funding initiative for new ventures.

IBM also announced that it has been selected by Vodafone AirTouch to design, build, manage and run a global Internet portal for wireless devices, including mobile phones and personal digital assistants. As part of the plan, IBM will integrate applications and content from several e-businesses, including Travelocity.com, InfoSpace.com, Sabre and Charles Schwab.

A July launch is expected in North America, Europe and Australia. The wireless devices, from Nokia, Ericsson and Palm Computing, among others, will allow users to operate customized browsers and offer a full range of e-commerce capabilities, such as trading stocks, making travel reservations and buying products directly from e-tailers.

IBM intends to facilitate what it calls “pervasive computing,” using wireless technology to allow users to connect to their vehicles and appliances, as well as to other lifestyle machinery.

“We are opening a new chapter in the development of the Internet, adding a fourth ‘W’ to the World Wide Web,” Vodafone chief executive Chris Gent commented. “From now on, it will be the World Wide Wireless Web.”

IBM To Foster E-Business Startups

IBM announced the establishment of IBM Global Financing, a $500 million initiative that is aimed at partnering with venture capital firms to provide financing for new business-to-business (B2B) Internet companies that require hardware, software and services. Qualifying companies will already have completed their first round of venture capital financing.

“We recognize that next generation companies have unique requirements and we are committed to delivering flexible, creative financing options that will support their needs and enable them to grow their businesses,” said William Doscas, IBM Global Financing’s vice-president of financial products and sales operations.

Unwavering Commitment to B2B Ventures

The initiative is part of a $1 billion project to encourage sales of IBM goods and services to startups and their investors. Since last May, IBM has invested $200 million in such venture capital firms as Meritech, Java Fund, Capital Group and Vantage Point.

The company has long shown a commitment to startups with its business incubator service that provides individual startup companies with up to $1 million in technology and services at no cost for up to six months. Included in IBM’s financial assistance program are leasing, financing and rent-to-own plans.

Hard Look at the Financials

Meanwhile, Big Blue is chalking its fourth quarter struggles up to a Y2K-related decrease in spending on business computer systems among some of its major corporate clients. Many industry analysts agree with IBM’s assessment and anticipate that the company will rebound quickly.

Even though Y2K turned out to be much ado about nothing, IBM feels that the financial ramifications could easily stretch throughout the first quarter of this year.

Makers and distributors of mainframe computers and accompanying software programs felt the biggest squeeze of massive Y2K fears among customers, and IBM remains the world leader in production of mainframes.

Embarrasing E-Commerce Slip Up

In an unrelated action, IBM had an embarrassing slip up today on its ShopIBM e-commerce site. The company inadvertently priced its ThinkPad i Series 1400 computer for $1 each because of a “data error.” The machines typically sell for about $1,300 to $1,500.

Customers were quick to jump on the mistake, apparently ordering several dozen systems before the error was uncovered. IBM acknowledged the error and stated that it was not going to sell the machines for $1.

IBM said that it would apologize to the customers individually and suggested it might offer them the machines at a discount.

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