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IBM and Mercantec Let SPs Pay as They Go

IBM and Mercantec today (Nov 10) announced usage-based pricing for service providers that host e-commerce sites for their customers, leveraging IBM's industry-leading UNIX server platform and e-business support services with Mercantec's SoftCart storefront software.

"Our revenue stream -- and our success -- is directly tied to theirs. It's a shared-risk model," Al Rosen, program director, IBM eBusiness Solutions, told ASP News Thursday. "This is a very different type of deal than when someone sells you something, drops it off and leaves."

Under the program, service providers (SPs) will receive as many IBM Unix servers pre-loaded with Mercantec storefront applications as they need. After an initiation fee to cover a "franchise kit" covering technical, educational and marketing services, will be billed only for the number of commerce storefronts that their customers use, effectively removing upfront cost and risk for service providers.

"The deal's structure really makes it very compelling to any ISP who's even remotely interested in ecommerce," Alex Louis, Mercantec's EVP marketing, told ASP News. "So far we've presented it to 3 ISPs and had 3 takers."

IBM and Mercantec have identified about 4300 named accounts to which they will begin marketing this service, but the number of SPs who sign up is not going to be the measure of the program's success, according to Rosen. "Of course we'd love to get all of them, but it's less about the number of service providers we sign up and more about the number of downstream merchants," he said.

Customers who enroll in IBM's usage-based pricing program, implemented by IBM Global Financing, establish a price-protected usage fee. Upon enrollment, customers pay a $10,000 initiation fee that covers technical, educational and marketing services, as well as a bonus of $5,000 worth of pre-paid storefront usage fees. The end result of the program is a "fast track" to sustainable revenues for SPs by virtue of IBM's proven technology and Mercantec's easy-to-implement storefront software.

Rosen said that IBM toyed with the idea of offering just the pre-loaded servers with no up-front fees, but ultimately decided against it. "We wanted to be sure every service provider had the benefit of the services needed to jumpstart sales. We wanted to ensure success. The service provider doesn't make any money until they sells a storefront, and IBM and Mercantec don't make any money until they sell a storefront."

"The goal of this program is to provide an immediately deployable business solution," said Bill Doscas, VP 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."

From an SP's perspective, the package is an IBM solution of sales, support and services. The SP can in turn market the package to its customer as SP-branded, IBM-branded, Mercantec-branded, or any combination of those options, Rosen said.

As part of the original initiation fee, customers also receive installation services, as well as marketing and training services designed to give Service Providers an effective go-to-market strategy. These services include storefront validation, marketing support, a Mercantec Community Guide and ongoing training.

The initial shipment includes a single IBM B50 rack-mounted server, along with a Palm Pilot and IBM's SNAPP software to be used for hardware installation and management. Additional servers will be provided as needed.

SNAPP (System Networking, Analysis and Performance Pilot) is an innovative web-based application that allows customers to configure and manage an RS/6000 B50 server with hand-held computers based