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Microsoft, HP team on e-commerce

The two giants hook up with a troop of smaller vendors to offer a quick, cheap, and easy to install systems for the e-commerce market.

The e-commerce outsourcing train has left the station, with Microsoft and a handful of friends seated comfortably and firmly on board.

The Redmond, Washington-based software behemoth this week hooked up with Hewlett-Packard and a troop of smaller vendors and consultancies to offer companies a quick, cheap, and easy to install system for the e-commerce market.

The price: about $50,000. The product: E-Commerce Quick-Start, a bundle of hardware, software, and services to get companies up and running on an electronic commerce system.

"A lot of companies now want something they can fire up and get an online sales effort now," said Jim Balderston, industry analyst at Zona Research in Redwood City, California. "Middle market companies are not going to be hiring a lot of IT programmers. The promises of Internet storefronts in a box is maturing and being delivered now."

Quick-Start consists of Microsoft's Site Server Commerce Server 3.0, HP's NetServer LC II systems, Exodus Communications' hosting and management services, and CyberSource Corporation's on-demand commerce applications and services such as secure payment, fraud screening, fulfillment, messaging, and digital distribution. Also, Servinet Consulting Group, an e-commerce integrator, will provide consulting and integration services.

"There are a myriad of tricky business and technical issues surrounding electronic commerce. There has never been anything 'slam-dunk' about it," said Tim Knowlton, head of Wells Fargo Bank's e-commerce products division. "It's a very valuable thing for these leading vendors to be collaborating on a bundled solution that brings e-commerce implementation costs down out of the stratosphere while taking much of the risk out of building a commercial Web site."

Microsoft and HP are similar partners in another e-commerce venture called Pandesic, which is jointly owned by longtime Microsoft and HP allies SAP and chipmaker Intel. For the Pandesic deal, HP, as well as Compaq, provide hardware and Microsoft is the main software supplier with Windows NT and Site Server leading the contribution.

It comes as no surprise that Microsoft and HP are double dipping, analysts said, given that the market is predicted to reach $400 billion in the next four years, according to a recent study by International Data Corporation in Framingham, Massachusetts.

"The more companies get in deals, the more they learn about the e-commerce environment and the more they can segment to cover the market," Zona's Balderston said. "This is a nice little partnership. You want to cover as many bets and possibilities as you can."

However, Microsoft and HP won't be competing against themselves. Pandesic is designed for small companies looking to strike up a Web-based storefront or use the Web exclusively as their transaction mechanism. Quick-Start is designed as a prepackaged e-commerce system for companies looking to supplement their current business with an e-commerce system.

It's also the second day in a row that HP has flexed its e-commerce arm. Yesterday, HP announced a deal with the Canadian Imperial Bank of Commerce to jointly launch an e-commerce services company called Intria-HP. The Canadian bank and HP hope to generate nearly $1 million worth of business this year. The bank itself is one of the first customers along with Toys R Us and natural gas firm Westcoast Energy.

Reuters contributed to this report.