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IBM, Vignette in marketing pact

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CIOL Bureau
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NEW YORK: International Business Machines Corp. signed a joint marketing pact

with electronic-commerce software maker Vignette Corp. that could boost IBM's

revenue by as much as $1 billion over three years, the Wall Street Journal

reported on Thursday.

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The deal is expected to be announced Thursday, the Journal said in its

electronic edition. It is the latest in a series of IBM agreements with software

companies that establish IBM as the preferred provider of technologies to those

companies' customers.

The Journal said IBM would not disclose details of the Vignette deal.

Typically, similar arrangements call for IBM to get more than 50 per cent of

the unit sales of the associated products with the dollar amounts being

comparable, the Journal said.

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The newspaper noted that in May, IBM's chief executive cited industry figures

for analysts showing that for every $1 a customer spends on an application, it

spends $1 on hardware, $1 on server software and $3 to $7 on services. IBM said

it has signed up some 30 partners that will lead to $8 billion in revenue over

the next three years, the Journal said.

IBM had $87.5 billion in overall revenue last year.

Under these agreements with software providers, IBM will not enter its

partners' software-application market and will promote the partners' products,

the Journal said. In return, the software vendors commit to selling a large

percentage of products for use on IBM computers and installed by IBM's service

group.

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Vignette said it has rewritten its software to work with IBM's AIX, a variant

of the Unix operating software, according to the newspaper. Vignette will also

recommend to customers that they use Websphere and DB2 database rather than

Oracle Corp.'s database.

Shares of Vignette ended Wednesday at 35-1/8, off a year high of 100-5/8 but

up from a low of 8-5/16. IBM closed at 114-11/16, off a high of 137-1/2 but up

from a low of 89-3/4.

(C) Reuters Limited 2000.

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