In a speech in New York, IBM lhairman Louis V Gerstner Jr laid out vhy the focus on infrastructure is key to IBM's strategic direction in the next few years. Mr Gerstner said the company would invest $4 billion over the next three years on so-called e-sourcing. Mr Gerstner, who likes to say that "dot-coms are pot-toast," has been joking with associates that infrastructure has become `sexy." Indeed, Internet infrastructure companies have done better this year than Internet retailers or business-to-business start-ups. Mr Gerstner argues that IBM's broad capabilities give it a leg up on newer infrastructure firms, especially with large corporations that are nervous about letting customers and suppliers look at corporate databases via Web connections. IBM says it has been successful in capturing a large share of the Internet-related infrastructure spending. But in major market niches, other companies such as Sun Microsystems Inc. for Unix servers, EMC Corp., for data storage, and Oracle Corp. for databases, areahead of IBM, say most analysts.

Merrill Lynch concluded in a recent survey that IBM ranks a distant fourth in expected information technology spending by leading-edge companies in the telecommunications, electronic-business and dot-com industries. "That IBM trails in these fast-growing markets is a source of concern," says Thomas Kraemer of Merrill Lynch. John Jones, an analyst with Salomon Smith Barney, notes that IBM says its revenue from e-business services has grown 70% this year from $3 billion in 1999. He says his surveys show that "in the next three years, 70% of the most critical applications at large companies are going to be rebuilt or significantly enhanced because of the implementation of e-commerce." Mr Jones predicts that for such complex work, IBM will displace the start-up services firms that have been getting a lot of the early Web-design contracts. IBM's stock has been punished this year because revenue growth has been anaemic. Mr Gerstner has been telling analysts that the infrastructure that underlies the businessInternet provides IBM's most significant growth opportunity. Its 130,000 person Global Services business of people trained to install and start up computers, software and communications, gives it a leg up over most rivals whose services operations are comparatively tiny.

The new ad campaign is a shift from the past three years when IBM has used its "e-business" campaign to ensure that people think of it rather than flashier dotcom companies when thinking about doing business on the Internet. The TV part of the campaign will include skits in which businesspeople suddenly realise that building or combining complex computer systems is going to be difficult-the kind of job you would want Big Blue to tackle. In one spot, dubbed "Merger," executives from two companies in a secret meeting excitedly discuss the potential power of their combined firm. Then a voice says, "We'll have eight server farms in five countries and 14 different platforms, not including wireless." The chief honcho responds slowly: "Are you saying this is a good thing or a bad thing?" The message: It's bad. In another ad, twenty-something employees of an online company are celebrating early success at a party on a yacht. The chief executive, fresh off his cellular phone, tells them that venture capitalists havejust promised them $20 million more-on one condition. The company must replicate its entire computer system at three new sites in Asia. As the merry makers fall silent, a quiet voice asks: "What would we have to do for $5 million?"

The ad campaign is called "Chapter 2: e-business gets back to business." Most of the spending will be for television commercials, which are currently being shot. Less than 10% of the ad budget will be spent to advertise on the Web. IBM says that even though it isn't pitching consumer products in the infrastructure campaign, TV is an efficient vehicle for the ads. IBM wants to reach not just information-technology people but also chief executives, chief financial officers and marketing and sales executives -who they believe also influence spending on corporate computer systems. Advertising will appear most often on sports shows. Most of IBM's advertising in the past three years has been aimed at convincing corporate executives that the Internet opens up new possibilities for easily selling things.