At IBM's annual shareholder meeting in April, chief executive Louis Gerstner had good reason to be proud. The firm had posted record 1998 revenues of US$81.7 billion for the fourth successive year, the share price was up 76 per cent and the company's market value had increased by $69 billion. IBM was in good shape - a far cry from the early 1990s in the wake of blunders in its PC and operating systems strategy. When IBM coined the term 'e-business' two years ago and spent hundreds of millions of dollars on an aggressive advertising campaign, many thought that IBM was about to commit another embarrassing blunder. At that stage, nobody regarded the Internet as a serious medium for conducting commerce. E-business not only has arrived but IBM reported that it contributed $20 billion in revenue last year. Also, leading competitors such as Andersen Consulting, EDS, Hewlett-Packard (HP) and Oracle Systems are refocusing business. 'Today, our competitors aren't laughing. Many of them are too busy trying to emulate our message and strategy,' Mr Gerstner said. IBM realised, perhaps earlier than any of the large IT vendors, that e-business would continue to drive demand for services - the fastest-growing part of IBM's business - and enterprise computing. To capitalise on this trend, Mr Gerstner has mobilised the IBM troops - almost 300,000 of them - to refocus their products and service offerings on to the e-commerce market. One of the trends supporting IBM's renewed emphasis on e-business is the rising importance of business-to-business transactions as opposed to business-to-consumer deals. 'Today, 75 per cent of e-business revenue is from business-to-business transactions. Soon it will be 90 per cent,' said John Patrick, vice-president of Internet technology at IBM. Mr Patrick said IBM believed that trends such as 'pervasive computing', which would see all kinds of devices having access to the Internet, also would drive the adoption of e-business technologies which, in turn, would drive demand for IBM's products and services. Central to IBM's e-business strategy is IBM Global Services, the largest provider of IT services in the world with a 1998 revenue contribution of $30.1 billion. It has 130,000 employees and plans to recruit another 20,000 this year. Global Services also is IBM's fastest-growing business unit, growing at 20 per cent a year. It has more than 18,000 e-business engagements, with customers around the world. As companies move into e-business, demand is growing for consultants to help them put the right infrastructure in place. 'Infrastructure is the boring part of e-commerce but that is a big focus of IBM Global Services,' said Neil Isford, vice-president for e-commerce at IBM Global Services. He said IBM was expanding its e-business portfolio and would continue to build relationships with company executives. IBM also is strengthening its application-hosting capabilities, tapping into a vibrant market for outsourced services. The company hosts Web sites, some with substantial e-business components, for 1,300 large customers, exposing the myth that all large companies keep IT infrastructure in-house. 'This is a growing trend, creating a new application service provider segment in the industry,' said Mr Isford. IBM is expanding its Web and commerce-hosting capabilities, building trading networks and developing a suite of network-delivered applications. 'We have the advantage over our major competitors EDS and Andersen Consulting in that we own the technology that will power this market,' he said, referring to the fact that the company made everything from personal digital assistants to mainframe computers. Thanks to e-business and the need for mission-critical computing on the server, mainframes are enjoying a resurgence. In 1998 IBM shipments of mainframe computing increased by 60 per cent. IBM sees its server technology as central to e-business. 'E-business is a server-centric business,' Susan Whitney, vice-president of server marketing, said. 'In an e-business world, it's not just employees accessing the system, it's also customers, suppliers and business partners.' IBM has four server products - IBM Netfinity, AS/400e, RS/6000 and S/390 - that are being positioned as offering mission-critical back-end server computing and aimed at everyone from small e-business companies to large enterprises. But being first to identify the e-business phenomenon does not guarantee that IBM will always be a leader in providing the technologies that drive it. HP, although relatively late to formulate a cohesive e-business strategy, recently announced its arrival as a formidable player in e-business. It refers to its brand of e-business as 'e-services'. HP is also a leading player in enterprise computing. Others such as Oracle, and services competitors such as Andersen Consulting and EDS, are not far behind. But IBM believes it gives the customer better value. That translates into experience, end-to-end technologies and global reach. With the e-business revolution still in its infancy, the battle is just beginning to heat up.