IBM HONG KONG LINK RAISES EYEBROWS, FEARS STAKE PLANNED IN RESELLER

IBM HONG KONG LINK RAISES EYEBROWS, FEARS STAKE PLANNED IN RESELLER

A regional unit of International Business Machines Corp. of Armonk, N.Y., is taking an equity stake in a local computer consultancy, a move that has stirred some controversy and questioning of its motives.

The announced intention is to promote joint development in Hong Kong and the region of what are called custom information solutions for customers.IBM China/Hong Kong Corp. declined Tuesday to say how much of Commercial Software Services Ltd. it is acquiring or how much investment is involved.

John Clough, CSSL's managing director, is out of town and no one else there was prepared to comment.

Industry analysts and other hardware vendors estimate IBM's stake at perhaps 25 percent. It is believed to be the first such purchase the company has made in what is essentially a reseller of its products.

The taking of an equity position has raised eyebrows among competing resellers, who fear CSSL may get privileged treatment. "It certainly sets a precedent at this level of operation," said a rival computer maker who asked not to be named.

"If I were CSSL, I would certainly expect to get favored treatment," said another reseller, who also requested anonymity though he doesn't handle IBM products. "And if I weren't CSSL and handled IBM, I'd be asking whether they'd like to buy a chunk of me, too."

Australian-origin CSSL was established here in 1983 as a professional consultant on IBM's mid-range computers. From an original eight-person staff, it has grown to nearly 100 with offices in Singapore, Malaysia and Taiwan and distributors elsewhere in the region.

CSSL is the largest regional reseller of IBM products, including its popular System 36, System 38 and AS-400 series minicomputers. The last is credited with giving IBM a needed boost after a period during which some of its products suffered badly from competitors.

The Hong Kong company advises on specialist applications for IBM computers such as banking, finance and hotels.