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IBM set to launch new products strategy

The company will next week launch an ambitious makeover of its corporate technology strategy that will seek to cure one of the basic problems of the PC market today: how to make money on boxes.

IBM will next week launch an ambitious makeover of its corporate technology strategy that will seek to cure one of the basic problems of the PC market today: how to make money on boxes.

Big Blue is putting the finishing touches on its first "edge of the network," or EON, systems. Roughly speaking, under EON, IBM won't be selling PCs and servers to companies. Instead, the company will provide contained technology solutions. These technology amalgamations could include everything from expensive servers, software, PCs, all-in-one models built around LCD displays, new-fangled paper computers, handhelds or wearable PCs--tailored to answer specific functions.

Connecting these parts together, of course, will require consulting services and a wide range of technology, two factors that companies smaller than Big Blue, according to IBM, may not be able to provide.

Analysts say the computing behemoth may again have trouble moving as nimbly as it boasts. Technology Business Research analyst Bill Lesieur warned IBM's not reacting in "Internet time" could be its undoing.

"In typical IBM style, it's going to take multiple quarters over several years to roll out the entire strategy, which may not be timely enough in the market," he said.

The first EON products are expected to appear later this month, including a new PC line. As late as this week, IBM had not settled on the new brand name, said a source close to the EON project. At one point Personal Systems Group (PSG) executives had bantered around three possible choices, the source said.

EON continues to be a work in progress, and it will be one for some time. IBM's plan calls for three product stages through the second half of 2001, meaning PSG will continuously be testing and introducing new products and services for the next year.

Services are a key part of the ambitious package. Part of the services approach involves introducing consumers and small businesses to a more "direct" IBM, said a source close to the project. PSG plans to take more of its sales direct, following a decision largely suspending Aptiva consumer PC retail sales.

During the second quarter of this year, IBM will introduce special offers and discounted services exclusively for consumer and small-business customers buying over the Web. While Big Blue will continue selling computers through its dealer network, there will be increased emphasis on selling total solutions--systems and services--over the Web. A multimillion-dollar ad campaign directed at small businesses will seek to generate Web traffic and sales.

Word of the EON plans first leaked out in November, when Hewlett-Packard announced its post-PC plans, followed by Compaq Computer. The timing was no accident, analysts said.

"Of course, there is also the industry assumption that America Online will be selling branded PC devices, including AOL set-top boxes," Lesieur said. "IBM probably felt compelled to announce early, even though EON has probably been in the concept stage for years."

Besides selling more computers and services direct, IBM will also offer more automated services. Other services will be available via email updates, personalized customer Web pages on the PSG support site and an online assistant accessing technical support information.

One other feature is e-Key, a software tool that connects to a corporate network or the Internet with one mouse click.

Many of the most sophisticated, automated and Internet interactive services will be targeted to mobile users. Besides access to instant electronic support, mobile users will be able to connect to a special ThinkPad user community Web site.

IBM will also introduce a new class of services as it increasingly moves into wireless, which is a central design element behind all EON devices. Big Blue plans to leverage recently forged relationships with Sprint, Nokia and others to provide wireless connectivity and services to corporate networks and the Internet.