IBM has launched an initiative designed to help new companies into the 'Internet Generation.' The comprehensive worldwide scheme appears to leave everyone a winner, especially IBM.

New Application Service Providers (ASPs) could be one of the big beneficiaries - but not as big as IBM in the new NetGen initiative. As well as ASPs, new Internet Service Providers (ISP) Portals, Web Hosters, Start ups and telecommunication companies can all apply to take part in NetGen. The aim of the scheme, IBM claims, is to enable Australian e-businesses to achieve sustainable growth. NetGen customers will benefit from advice, partnership and technology from IBM. To implement the program IBM has formed partnerships with Web hosters, venture capitalists and incubators.

Initiatives such as this show a mature attitude towards the growth of the Internet as it enters its post shake-out stage. Companies like IBM feel they need to take a much larger part in the Web's growth, one that will enable them to benefit from it over the long term, rather than quick sudden sales. "It is no longer just about getting to market first; it's about building a sustainable, successful business model with a reliable technology infrastructure underpinned by sound business development advice and support," Peter Hreszczuk, Country Executive for NetGen in Australia said.

IBM, it would appear, are well placed to ensure a continued base of product buyers, especially in the all-important high end hardware market, as well as access to bright new ideas, some of which IBM hopes will give it a chance to innovate and lead the market. "We believe they will need to buy technology," Hreszczuk said.

It's not all one way though, if a start up is developing new software they will be given access to IBM's Australian laboratories for testing - although, "we like to see what they are doing and quiet often it can be of value to us," Hreszczuk said. A sign of what sort of company will be seriously considered was this hint: "We will typically invest in companies that have some intellectual property."

There is no initial fee for joining stage one of the five phase scheme, although for an ASP model, the customer will be expected to sign an agreement that states that it will be on IBM equipment. For other sectors such as telecoms, start up or a portal, the IBM-exclusivity agreement does not apply. "There are no exclusive deals, we feel the market should decide" Hreszczuk said. Although, with access to the IBM network of companies it is inevitable that new ventures will be able to get better deals on IBM hardware than rival brands.

New ventures gain from strong alliance

Although IBM looks set to create a stable of ventures that can either provide revenue, initiative, partners or a steady stream of buyers, new ventures will gain from being allied to such a successful player. When creating the NetGen initiative, IBM research found that new Internet companies often lacked the full basket of skills needed, and this is the gap they hope - along with their partners - to fill.

-Through its own worldwide e-business expertise, IBM has a compelling story for NetGens and a strong mix of carefully selected business partners - each bringing sound experience and local industry knowledge from with their area of expertise to help NetGens," Hreszczuk said.

Part of this research showed that small companies wanted to get into bed with corporations like IBM, but had no clue which department or person to speak to in the titanic organisation.

-We felt it was important to give them (start ups) a single portal access into IBM so they have a department to call," he said. As part of a global initiative there are 35 offices for start ups in the Asia Pacific region, with Sydney acting as Australian HQ. Through this network a company will have access to global partners.

A global outlook is very much part of what IBM is looking for in the start ups it is willing to incubate. -If a company does not have a global aspiration we are not that interesting in them, as typically the Australian market is not big enough," Hreszczuk said. The scheme will allow start ups from all around the globe to communicate to each other and other global partners of IBMs. This part of the initiative stems from IBM's belief that a global player will not succeed by being based in one location. -Having IBM helps attracts capital and gain access to markets quicker," they claim.

By being part of the scheme, start ups will be able to gain access to the knowledge bank that sits within the IBM. Already, the company claims to have passed on valuable knowledge. For example, Hreszczuk said that one company was able to learn that by spending 10 percent more on software development initially, it would make greater saving later on when it had to localise software for global roll-out.

Bricks and mortars attracted

IBM and Venture Capitalist partners Technology Venture Partners (TVP) have already noticed the scheme is attracting bricks and mortar companies keen to get online and series entrepreneurs. -Before they were trying to see what would make them different from all the other entrepreneurs, now they (serial entrepreneurs) are getting noticed," Philip Wing of TVP said.

The 'correction', as the NetGen people like to describe this year's dot-com crashes, has created a breed of entrepreneurs who would like to start having another go, and NetGen does not rule them out of participating in the scheme. -We would look for the reflective capacity in the entrepreneur and that they can sit back and analyse," Wing said.

Cynics could suggest that IBM is merely jumping into this new form of business to shore up flagging hardware sales, especially in the light of profit warnings from Apple, Intel and Motorola, but IBM claim they have noticed no downturn. -We don't see a slow down of the hardware market. There has been a significant growth in hosting, storage and networking equipment," they said. The company also points out that there is significant investment in data centres in Australia.

-There are still a lot of funds still flowing in for technology investments. The correction has not changed that," Philip Wing said, indicating, perhaps, that the downturn is not as bad as some suggest. -Australia is a sophisticated market for proving models and concepts," he added.

itiatives as this can only indicate to detractors that the Internet is still a serious industry sector, and one that is important to Australia, -We see a lot of development and ideas coming out of Australia. Companies such as IBM have realised that they can not do it themselves, especially in new markets," Hreszczuk said.

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