IBM & CISCOIBM, Cisco join e-commerce efforts
By Mike Tarsala, CBS MarketWatch
Last Update: 6:21 PM ET Jan 12, 2000 NewsWatch
IBM and Cisco announced Wednesday a joint effort to create electronic commerce products.
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01/13/2000 9:35:58 AM ET
The two companies will team up for marketing and testing. Work will center around IBM's (ibm) mainframe-class computers and Cisco's (csco) network systems. The goal is to improve on technology called load-balancing that can shift e-commerce computing to other parts of a network during peak times, in hopes of improving speed. Also, the companies have committed to other e-commerce products testing with plans to license each other's technologies.
"It represents a big leap ahead of our competition," said Ross Maury, a vice president in charge of IBM's S/390 computers.
Shares of IBM added 1/2 to 119 1/2 while Cisco shares fell 2 11/16 to 103 13/16.
Both IBM and Cisco have developed load-balancing technologies separately. But the companies are making improvements to their respective products thanks to the newly announced collaboration, says Art Olbert, an IBM executive in charge of software alliances. IBM changed algorithms in its S/390 computer software while Cisco tweaked certain routers.
"The way we had it before is that you could tune the engine and you could tune the transmission, but you couldn't tune the two together," Olbert said. "We've made modifications as a result of the testing, and we were able to come up with significant improvements."
Wednesday's announcement stems from talks last year aimed at making IBM and Cisco better corporate buddies, said Selby Wellman a Cisco senior vice president. The Justice Department in December approved a strategic alliance between the two in which IBM sold network equipment patents to Cisco for $300 million, and Cisco agreed to buy $2 billion of parts from IBM.
"This is one of the first (announcements) we've rolled out, and we think it's very important to customers," Wellman said. "You will see more over time."