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E-business the next frontier for Big Blue

IBM's Net Generation Business unit plans to provide hardware, software, services and financing to start-ups to help cut the costs of starting a business.

An IBM unit focused on Internet business plans today to unveil a series of e-business initiatives aimed at helping start-ups get up and running quickly.

IBM's Net Generation Business unit will announce its Quick Launch program, which will provide hardware, software, services and financing to start-ups to minimize their up-front investments. The company will also unveil its Incubator Series, where it will partner with e-business incubator firms to provide products and services to portfolio companies.

The initiatives build on the $500 million venture fund the company established in January to fund start-ups focused on business-to-business commerce, including application service providers (ASPs), portals, Internet service providers and Web-site hosting companies. IBM plans to provide equipment leasing, software, services and long-term financing with interest.

In the past six months, traditional hardware makers have rushed to establish large sums to attract start-ups and Internet companies to their respective technologies, hoping to latch on to the coattails of the next or eBay as a growing company expands its technology purchases.

Earlier this year, Sun Microsystems started a $300 million fund, and Hewlett-Packard and Compaq Computer set aside $1.5 billion and $1.15 billion, respectively.

The companies offer varied technology packages, some with hardware, some with software and middleware, and some with their services or the services of their partners.

"What IBM has going for it is that it has a complete set of products and services," said Amy Wohl, president of consulting firm Wohl Associates. "(Sun, HP and Compaq) to a lesser extent have the ability to do different aspects, but to have it all in one place and at a huge volume is the thing that stands IBM apart."

IBM said one of its primary goals at Net Generation is to make the technology giant relevant to start-ups. New companies will receive IBM services and products mostly if they are already part of the portfolio of about 40 venture capital firms and about 10 incubators.

"They don't even need a credit check," said James Corgel, general manager of IBM's Net Generation. "If the VCs have invested in them, then we'll invest in them."

IBM will announce today it has entered into agreements with several incubators, including Sydre, Antfactory and XXI Technologies.

While many still consider the ASP and hosting market to be on the verge of taking off, companies in other e-business sectors, like business-to-consumer and business-to-business, have recently been battered on the market.

"We recognize there is risk in this market, but we think a long-term investment through financing and services is sensible because we want to be part of the new economy," said Corgel.

IBM added that it will stay away from straight funding investments.

"We don't want to own pieces of lots of small companies--that is not our strategy," said Corgel.