IBM is expanding its partner program to include the Internet
service providers it considers crucial to helping the firm to expand
its e-business push to small and midsized businesses.
The new IBM ISP Industry Unit, an arm of IBM's Global Industries group, will sell IBM
hardware, software, and computer services to ISPs, who in turn offer
customers services including Web access, email and messaging, and
In a press conference held this morning, IBM detailed its plans to
aggressively market products and
services on all of their platforms to ISPs, which are expected to generate
revenue of $37
billion in the United States by 2003, according to Framingham,
Massachusetts-based industry research firm
International Data Corporation.
Jim Corgel, general manager of the new unit, said it
will focus on meeting
the increasingly complex needs of ISPs--who must now cater to both the
average consumer looking to get online or build a Web site, as well as the
business-to-business customer demanding e-commerce applications.
"As ISPs move up this value chain there becomes a logical shift in the
marketplace," Corgel said. As that
shift occurs, ISPs will benefit from partnering with IBM because the
company has the staff and expertise that ISPs may lack, supports open
platforms--including the Unix-like Linux operating system and the Apache
freely-distributed Web server--and is developing the latest e-commerce
technology, the company said.
In recent months
IBM has moved to build momentum
for its Web-based application development, which includes widespread Java
support as well as a new line of Web
application server software. IBM recently announced broad support for
Linux, and said the company will be developing applications for ISPs to run
Additionally, IBM said it will provide ISPs with Unix and Windows NT-based
servers such as the RS/6000 and Netfinity.
However, the market IBM is targeting, which includes about 4,000 smaller
ISPs with 10,000 or fewer customers, may not buy what Big Blue is offering,
said George Peabody, analyst at Boston-based Aberdeen Group.
"Those ISPs don't even think about IBM," he said. "The small ISP is so busy
keeping up with [getting people connected] that that whole idea of
solutions isn't even on their screen."
Besides, he said, many smaller players are already turning to other vendors.
"A lot of them go to what runs on Sun or what runs on NT," he said. "Sun is
far more identified with the Internet and Unix."
However IBM is smart to start targeting new business from ISPs and their
customers the same way the firm would go after the manufacturing or finance
industry, said Sam Albert, an independent IT analyst based in Scarsdale,
"How do you get to a million customers who are too small and don't think
of IBM as the vendor of choice?" he said. "One way is through business
partners. The other is through ISPs."
Matthew Kovar, analyst at Boston-based Yankee Group, said IBM's strategy is
similar to what Sun Microsystems and Hewlett-Packard are trying to do "to create
bundles of solutions that go beyond the Web page." Those bundles include
merchant server applications, back-end systems integration, and inventory
"IBM is meeting an insatiable demand from the ISPs that want this
e-commerce solution set," he said.
ISPs will be able to sign up for the business partners program on the IBM
Web site starting May 3.
The company has structured the program to include three levels of
partnership, including "member," "advanced," and "premium," ratings, based
on certification, skills, and revenues generated for IBM. IBM currently has
45,000 business partners who already resell the companies hardware,
software, and services.
About 18,000 IBM partners are with its Lotus Development subsidiary.
Reuters contributed to this report.