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IBM Corp. wins contract to help run eBay Web site

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NEW YORK — Two of the Internet bust's most conspicuous survivors, IBM Corp. and eBay Inc., announced an agreement to make IBM software integral to the online auction leader's operations.

As part of the deal — whose terms were not released — eBay will rebuild its popular consumer auction site using IBM software called WebSphere, a "middleware" product used by large businesses to handle Internet transactions.

Amid the fierce competition among vendors of enterprise middleware — which pits IBM against market leader BEA Systems, as well as Sun, Oracle, Hewlett-Packard and Microsoft Corp. — IBM considered the contract a coup.

The announcement was made Wednesday by IBM president and chief operating officer, Samuel J. Palmisano, fingered in May by IBM chairman Louis V. Gerstner as his likely successor.

Palmisano said he was "ecstatic" that eBay, a company whose entire business depends on the reliability of its Web site, had selected IBM's WebSphere.

"We're able to work with people who get it and live it every day," Palmisano said in a telephone interview. "We won the deal on the technical merits. We build bulletproof systems."

EBay CEO Meg Whitman said the site had no middleware before WebSphere. The site was essentially running on the same architecture that the company put together in 1997.

With eBay growing quickly and planning on facilitating as much as $40 billion in merchandise sales four or five years from now, the company needed to overhaul its infrastructure.

"What this is going to allow us to do is make changes to the site more rapidly than we had in the past," Whitman said.

As part of the deal, IBM will use the eBay site as a sales vehicle for its products, and the two companies agreed to explore joint marketing opportunities.