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HP reworks e-commerce strategy

Hewlett-Packard is slated to unveil new hardware servers running its brand of Unix that are bundled with e-commerce software and targeted to ISPs.

In a major e-commerce announcement Hewlett-Packard today unveiled new software and e-commerce software bundles for hardware servers running HP's brand of Unix, targeted to the ISP market.

In addition to e-commerce offerings called Domain Commerce, HP also unveiled a new "Web Quality of Service" technology and an alliance with Cisco Systems to manage the availability of Web servers when they're in heavy use.

HP's announcements aim to strengthen its offerings against rivals IBM and Sun Microsystems. They also reflect a new version of HP's Internet commerce strategy as the company tries to rally its numerous divisions around its "extended enterprise" vision.

"HP's primary competitors like IBM and Sun Microsystems have been at it for a while," Salomon Smith Barney analyst John Jones told Reuters. "Everything we do is online these days, and if from a hardware or software standpoint a vendor doesn't support my ability to do that, they're out."

As earlier reported, today's news includes alliances with e-commerce software vendors iCat, Intershop, Open Market, and BroadVision. HP's new Domain Commerce middleware will include templates that make it easier to set up e-commerce software from those vendors.

Also included in Domain Commerce are HP ServiceControl, HP's new software for managing busy Web sites, vPOS cash register software for merchants from HP's VeriFone subsidiary, management software based on HP's OpenView, and HP's OpenPix imaging software. HP's secure operating system software, Virtual Vault, is an option in the package.

Domain Commerce, which is optimized for HP's 9000 hardware and will be priced from $3,995 per processor, is due to ship August 1.

"There are a number of issues with the World Wide Web that still need to be resolved so that customers can feel comfortable about large scale, commerce-based applications," Nigel Ball, general manager of HP's Internet and Application Systems Division, told Reuters.

With Cisco, HP plans to develop other technologies aimed at more predictable Internet service.

The first product in HP's Web Quality of Service line is ServiceControl, which manages Web servers for more predictable use. In its first version, it provides peak usage management that helps Web servers handle large volumes of traffic and system overloads.

"I really like the Web Qqualty of Service story," said Allen Bonde, an analyst at the Extraprise Group. "If HP can market it effectively--and get their application partners to run with it--I think they've got something."

For customers in the process of making transactions, ServiceControl guarantees their connections will be made ahead of new arrivals. For those trying to connect, the software tells them how long their wait will be. In its first version, the software includes a policy-based system to prioritize and balance loads on servers and turnkey management software based on OpenView, and new load-balancing features that work with Cisco's LocalDirect software, built specifically to work with HP's offerings, for managing traffic from routers.

"We call it 'stop the bleeding' technology," said James Zepp, HP product marketing manager. Future versions will add new load-balancing features that will work with Cisco's LocalDirect software, built specifically to work with HP's offerings, for managing traffic from routers.

In the future, HP's new "User Classes" product will let businesses distinguish between an occasional customer and its big-spending regulars, and then offer them different services. New "Service Classes" will allow companies to prioritize transactions during peak usage periods. Online retailers, for example, could give sales transactions higher priority than browsing so they can boost revenue.

"Right now, the Web is the same for everybody," Ball said. "It doesn't matter if you are a casual browser or someone spending tens of millions of dollars. The Web is unable to distinguish you from the masses."

The new HP line is designed to give companies options beyond simply adding servers or bandwidth to cope with heavy usage--and Ball snipped at IBM during the event for suggesting that bandwidth problems can best be solved with more hardware.

"IBM is throwing hardware at the problem, and Sun is simply missing," Ball said. "Even though these sound like fairly basic issues, nobody's addressing them, other than with fairly clumsy routes."

HP ServiceControl, now available for evaluation from HP's Web site, is priced from $800 per processor and expected to ship June 1.

Separately, HP's payment division, VeriFone, also announced that its VeriSmart smart card system will allow service providers to give consumers access to smart card applications over the Internet. Chia Hsin, a Taiwanese smart card provider, is marketing the system to financial institutions.

VeriFone also unveiled a new smart-card appliance for the consumer market called PayPort, a palm-sized smart card reader/writer appliance and peripheral device that plugs into the serial port of a PC. That enables the PC for new applications ranging from electronic cash to security for Internet and other applications.

VeriFone already has another smart-card appliance called Personal ATM, which plugs into a phone line and allows users to download e-cash or handle other transactions.

Patricia Seybold Group analyst David Marshak praised HP's ISP offerings, particularly for mid-sized and smaller ISPs hungry to get into e-commerce hosting.

Not everyone was so positive, however.

"HP's announcements to date with other e-commerce companies have been pretty underwhelming," said Chris Stevens, e-commerce analyst at Aberdeen Group. He acknowledged that HP's Internet payment strategy has been clear since it bought VeriFone last year.

HP's past deals have been designed to sell hardware and to hedge the computer giant's bets in e-commerce by offering comarketing support to e-commerce software vendors, Stevens contended. But HP has never integrated e-commerce software with its hardware, he added.

"It looks as though HP has taken a page from Compaq's play book in bringing together best-of-breed third party solutions to create a superstore of solutions for CSPs instead of a bundle aimed at single businesses," said Scott Smith, e-commerce analyst at Current Analysis.

HP also has been working with e-commerce software vendor Interworld, analysts said, but it may not be part of today's announcement because porting that software to HP-UX is not complete.

ISPs are drawing increasing attention from technology vendors. Last week Microsoft unveiled new software for ISPs that runs on its Windows NT operating system.

Open Market has concentrated on selling to ISPs and hosting companies as well, and ISPs have been important resellers for both Intershop and iCat.

Reuters contributed to this report.