THE E-COMMERCE RACE: SPECIAL REPORTS - IBM INTERVIEW

Guest Speaker: Karl Salnoske, General Manager E-commerce, IBM Internet Division
Interviewer: Diane Watlov-Collins, President, MARKETINGWEB.COM
Date: May 5, 1999 (Rescheduled from original date.)
Press Release

Welcome to the MARKETINGWEB.COM Forum! The purpose of this Forum is to provide online discussion concerning the methods of Internet marketing.

** Marketingweb enters.

Marketingweb: Welcome to the May 5, 1999 session of the E-Commerce Race-Special Report Series. Tonight our guest is Karl Salnoske, General Manager of E-Commerce for IBM.

Marketingweb: Mr. Salnoske is responsible for the overall IBM electronic commerce strategy and software products that enable business-to-business and business-to-consumer electronic commerce.

Marketingweb: He leads a team that is focused on delivering e-commerce solutions for a range of customers, from small business to large enterprises.

Marketingweb: 1-800-Batteries, Earthsavers, eSeeds.com, and Lehman's Non-Electric Catalog are just some of the small and medium-sized businesses running on IBM solutions.

**KSalnoske enters.

Marketingweb: Welcome, Karl.

Marketingweb: We appreciate your participation in our Forum.

Marketingweb: Shall we get started?

KSalnoske: Hi Diane, it's a pleasure to be here. Let's get started.

Marketingweb: The e-commerce solutions that are being designed for small business tend to fit into three major categories: template commerce; shrink-wrapped commerce; and custom commerce. Where would you place IBM's solutions?

KSalnoske: We actually have solutions for all 3.

Marketingweb: Can you tell us a little about your products in the various categories?

KSalnoske: Our template based offering is called Home Page creator and it is available for $35 per month and up.

KSalnoske: You enter in your information and we host the site in one of our mega server farms.

KSalnoske: Our flagship shrink-wrapped product is called Net.Commerce.

KSalnoske: It sells for $5000 and comes with everything you need to set up a commerce site.

KSalnoske: It runs on everything from PC servers up to mainframes.

KSalnoske: Through our IBM Global Services we help customers design and build lots of custom commerce sites, if Net.Commerce doesn't meet their needs.

Marketingweb: So, IBM really has the ability to service every level of e-commerce.

KSalnoske: We are serious about helping all sizes of business become e-businesses.

KSalnoske: As you know, the Internet is the great equalizer.

Marketingweb: Yes.

KSalnoske: No one knows how big your company is when you are on the web.

Marketingweb: How about scale. What if the business starts with one of your smaller solutions then grows quickly and needs to upgrade?

KSalnoske: Net.Commerce can scale from a single PC server to multiple, to UNIX servers and up to mainframes.

KSalnoske: All with out ever changing the application code.

Marketingweb: So, they're not stuck.

Marketingweb: They don't have to scrap the system and start over.

KSalnoske: No, that is one thing we differentiate ourselves on, you never run out of horsepower with an IBM solution.

Marketingweb: That's a great selling feature.

Marketingweb: What additional types of services will IBM package into its small business offering bringing to play the strong IBM marketing potential?

KSalnoske: We provide everything a small business needs to become an e-business.

KSalnoske: Through our StartNow offering we provide the software preinstalled on a server.

KSalnoske: And one of our certified business partners will deliver it, set it up and work with the small business to set up their initial catalog.

KSalnoske: Totally turnkey and pretty painless, the price is about $35,000

Marketingweb: Are these partners Value Added Resellers?

KSalnoske: Yes and they have the application development skills to link the commerce solution into a companies existing systems.

Marketingweb:Are they trained at IBM?

KSalnoske: Yes we provide up to three weeks of training and then they have to pass a rigorous test to get certified.

Marketingweb: Does the client then turn to the VAR for future support?

KSalnoske: They can or if they have technical staff in-house, we can train them also.

Marketingweb: Nice option.

KSalnoske: We try to be flexible.

Marketingweb: What position does IBM seek in the small business marketplace? Do you intend to dominate this market? Do you feel the potential is there?

KSalnoske: We want to be the solution provider of choice for small business, however they want their solution delivered . That is why we offer both shrink wrap and hosted solutions.

KSalnoske: The small business market is THE growth market in the IT industry.

Marketingweb: I agree.

Marketingweb: StartUp2 for E-Business has been described as "everything in one box" that a person needs to get their e-business up and running.

Marketingweb: Can you describe the features and pricing for us?

KSalnoske: We think it is esp. important for small business to provide complete solutions. Small business typically don't have the time or resources to pull a bunch of different pieces together

Marketingweb: Very true. StartUp2 allows you to go on-line, publish, deal with credit cards, maintain and host a Web site...

**Guest411 enters.

KSalnoske: Yes, we ship with a commerce server, a database, and a web server

** Guest411 exits.

Marketingweb: Must StartUp2 be used in conjunction with IBM HomePage Creator for business?

KSalnoske: Home Page Creator is the name of the service offering that provides the commerce server and payment processing...

KSalnoske: We offer a number of different payment options

KSalnoske: You can find out more info about our small business offerings by going to our web site www.ibm.com and clicking on Resources for Small Businesses. This will take you to our Small Business Center site.

Marketingweb: How about Catalog Architect. Can you give us a run down on its capabilities?

KSalnoske: Yes Catalog Architect (CA) is intended to help companies with large and dynamic catalogs manage all of that data ...

KSalnoske: It is a PC based tool that allows you to easily build a description of your catalog and then to quickly maintain the data in the catalog.

KSalnoske: Our experience has shown that up to 50% of the ongoing cost of maintaining a site is in managing the catalog data ...

KSalnoske: The goal of CA is to help companies significantly reduce that cost.

Marketingweb: You can purchase it bundled with your Net Commerce Pro Server @ $19,995

Marketingweb: alone $3,000

Marketingweb: Good deal!

KSalnoske: Yes we include a free seat in Pro and additional seats can be added for $3K with a sliding discount for multiple seats.

Marketingweb: IBM sells companies the ability to market products and services on the Internet. You have mentioned that IBM will also be purchasing products and services through online channels.

KSalnoske: Yes, it is a double benefit for all businesses. You grow your revenue while at the same time lower your costs.

Marketingweb: Exactly! This is why small businesses must get online. If they don't, they will be shut out of this type of channel marketing.

Marketingweb: This is equally important to large businesses. Small business represents a very good profit margin market for many larger companies.

Marketingweb: If the larger businesses through e-commerce end up cutting the little guy's market then the larger businesses that service small business with IT products will lose market share.

Marketingweb: Small business must get online before 2002.

KSalnoske: Businesses (large and small) who operate in between the end customers and the manufacturer or service provider must find new ways to add value...

KSalnoske: This is true in IT, insurance, travel, etc.

KSalnoske: Many of our business partners are finding new value added services that they can provide.

KSalnoske: E-commerce services is one area that is particularly hot.

Marketingweb: Karl, we appreciate the expertise you have shared with us tonight. How may interested business get in touch with you or your team?

KSalnoske: The easiest way is to go to the web site I mentioned previously...

KSalnoske: They can also e-mail me at ksalno@us.ibm.com

KSalnoske: Thanks for hosting me tonight.

Marketingweb: You are very welcome. IBM has a great deal to offer the small business wishing to add e-commerce to his marketing ability.

Marketingweb: Your reputation for meeting deadlines and selling solid product is unsurpassed.

Marketingweb: The transcript of this chat will be available tomorrow morning.

KSalnoske: OK, thanks and good night.

Marketingweb: Good night and thank you!

Marketingweb: This concludes tonight's interview portion of The E-commerce Race Special Reports. We wish you all a pleasant goodnight!

**KSalnoske exits.

**Marketingweb exits.

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