Hardware Incentive Aims to Boost Dot-coms

SAN MATEO (03/24/2000) - The writing is on the Web -- leverage the Internet or die -- and companies are paying attention. But not every company has the resources, or even the inclination, to bring together the tools needed to set up and manage its e-commerce site.

Compaq Computer Corp., Hewlett-Packard Co., Sun Microsystems Inc., and IBM Corp. are offering money and incentives to service providers and dot-com companies in an effort to become the de facto server configuration on the Internet. The approaches differ, but the motivation is the same: Become the option for companies that feel they have no choice but to get on the Internet.

Compaq now offers cash rewards to customers who use its products to run their Web sites, putting $1 billion behind the venture.

"We want to underwrite and accelerate getting Web sites up and getting deployments out there," said Keith McAuliffe, vice president and general manager of Compaq's service provider business unit.

This same urgency motivated HP, which last week announced an arrangement with Microsoft to provide "shrink-wrapped solutions for service providers," according to David Herron, a consultant for HP. Hewlett-Packard will provide the NT-based infrastructure, and Microsoft will help with software structure, but there's more.

"Financing could be part of it," said Herron. "HP also offers a hosting service through its CUSD [Computing Utility Services Division], with a Web farm that's on-site at HP."

Hewlett-Packard last week announced its Garage Program to fund Internet start-ups up to $2 million. HP will require the company seeking funding to have at least $250,000 in capital and a sound business plan.

The Garage Program will help locate venture capital funding, offer marketing services through its co-marketing relationship with Corporate Yahoo, and, in addition, will build a site with HP technology. The program adds $500 million to the $1 billion HP committed last December to its investment program and increases the original $1 million financing to qualified dot-coms to $2 million.

Although $2 million is below the typical dot-com start-up cost, the funds are actually targeted at financing with a six-month deferral payment plan, so-called business essentials. Essentials include hardware, such as HP 9000 NetServers, security storage, software consulting, support services, and training.

Sun has no plans to become a Web hosting service for fear of competing with its own customers, but it does offer a bundled Web site starter kit. A program from Sun, called Suntone Certified Service, can also access "multiple millions of dollars" in co-marketing funds to assist customers on the Web.

IBM already hosts over 500 Web sites, and in the last several weeks has set aside $500 million through its Global Financing Group to fund start-ups that enlist IBM technology for their back-end support, according to Ed Kilroy, IBM's e-commerce general manager.

"The big guys are using the strengths of their corporate heritage to move into the dot-com space," said Scarsdale, N.Y.-based industry consultant Sam Albert.

"Businesses that feel they have to do something in the dot-com space but aren't sure how will migrate to names they can trust."

"These companies were around before the Web," Albert said. "ASP [application service providing] used to be known as time-sharing; outsourcing used to be called facilities management. You can say it's the more things change, the more they stay the same, but they're really using old strengths in a new landscape."

Compaq Computer Corp., in Houston, is at www.compaq.com. Hewlett-Packard Co., in Palo Alto, Calif., is at www.hp.com. IBM Corp., in Armonk, N.Y., is at www.ibm.com. Sun Microsystems, in Palo Alto, is at www.sun.com.

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