IBM Offers ISPs ‘Pay-As-You-Go’ E-Commerce Plan

IBM (NYSE: IBM) and e-commerce software company Mercantec announced Friday that they have formed a partnership to offer the first “pay-as-you-go” e-commerce package to Internet service providers (ISPs).

In a move meant to target the small business sector, Big Blue will provide ISPs who sign up for the program all of the software and hardware necessary to offer e-commerce storefronts to their customers.

Out of the Box

After enrolling in the program and paying the upfront costs, ISPs will receive as many servers as they need, and thereafter will be billed only for the number of e-commerce storefronts their customers use.

“The market has been calling for a usage-based pricing option, not only for individual applications, but for the complete range of e-business enablement,” said Per Larsen, vice president of marketing, IBM WebServers.

Customers will receive one IBM B50 rack mounted server, Mercantec’s SoftCart storefront software, credit card handling services, storefront provisioning, and technical support. According to IBM, each server can support up to 200 storefronts.

Ante Up

Though the program is being touted as a way for ISPs to cut upfront costs, they must pay a $10,000 (US$) initiation fee to cover the cost of technical, educational and marketing services. Additionally, ISPs have to pay a deposit of $5,000 for pre-paid storefront usage fees.

After the initial payment, service providers would be billed $15 to $120 per customer per month, depending on the size of the storefront. IBM is advising ISPs to charge consumers $50 to $200 per month for e-commerce services.


Despite the hefty price of admission, the new program removes signficant upfront costs and risk for the ISPs. For example, the standalone price of the server alone is $10,000 to $15,000 and Mercantec’s software alone can cost up to $25,000.

Essentially, the plan will allow ISPs of all sizes to implement plug-and-play e-commerce solutions for their end customers.

Mercantec’s Internet commerce solutions are currently used by more than 17,500 merchants worldwide through more than 200 ISPs, including EarthLink, Sprint, Interliant and Telefonica.

“The goal of this program is to provide an immediately deployable business solution,” said Bill Doscas, vice president of marketing & sales, IBM Global Financing. “We want to be seen as the company that recognizes the changes in the marketplace and responds with programs, alliances and pricing options that allow companies to quickly capitalize on market opportunities.”

Banking on Japan

In separate news, IBM Japan said Friday it was establishing a new company — dubbed Regional Bank Solution and Services — to provide information technology outsourcing services to regional banks in Japan. Big Blue plans to provide operations management, planning, development, and infrastructure maintenance services to the banks.

Slated to launch in early 2001, the new company will assemble in Tokyo in December with a staff of 50 consultants.

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