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. Last Updated: 07/27/2016

IBM's New Market: Software by Satellite

NEW YORK -- Instead of poring over shelves brimming with software, buyers will soon be able to scan hundreds of programs via a touch-screen and have their choice beamed to a local store by satellite, IBM and a unit of GM Hughes Electronics Corp.

The project, announced Tuesday by International Business Machines Corp. and Hughes Network Systems, should mean easier shopping for consumers, as well as faster and less expensive manufacturing and shipping for IBM's Software Manufacturing Solutions unit.

For retailers, the system will provide "virtual inventory" for on-demand sale to their customers, the companies said.

IBM, the world's largest manufacturer of computer software, will also be able to upgrade the programs electronically. That will alleviate the need for retailers and customers to return programs to manufacturers for upgrading or debugging.

The system also will be used to send new or updated software to IBM's corporate customers. IBM said it expects to distribute up to 80 percent of its software maintenance services by satellite by the end of next year.

The Hughes Network Systems DirecPC service, launched Tuesday, uses a small satellite receiver to transmit documents, desktop video, computer software, games, news and other information to personal computers.

The system operates at speeds of up to 12 megabits a second -- far faster than modem transmission over telephone lines, said GM Hughes, a subsidiary of General Motors Corp.

It said the service can reduce a typical wait for modem delivery of a large document on the Internet computer network from an hour to as little as 90 seconds.

"This pipe is so much faster than a modem," said Thomas McPherson, vice president and general manager of DirecPC. "We can fill up a 90 megabyte hard drive in one minute."

The DirecPC hardware package consists of a 24-inch satellite dish and coaxial cable to connect it to a personal computer, plus a 16-bit adapter card. The kit is expected to retail for about $1,495, and basic subscriber service is expected to be less than $15.95 per month plus user fees.

Field trials currently underway are expected to be completed in January, with the initial service available shortly thereafter, GM Hughes said.

"Together, our organizations have the potential to increase distribution efficiency, expand the content choices and improve the way in which products and services are delivered," said Pradman Kaul, president and chief operating officer at Hughes Network Systems.

"It sounds ambitious. I hope they have customers," said Mark Stahlman, president of New Media Associates in New York.

Hughes executives said IBM's usage is just one application of many possible ways to use the DirecPC service, which will compete with on-line computer services. But initially it will be targeted to corporate customers.

The Hughes service will also compete with interactive television projects currently in development by many cable television companies and local phone companies.

"The telephone companies and the cable companies talk a lot about delivering this kind of content," McPherson said. "The problem they have is nationwide access. We will have that immediately as soon as we turn the service on."

McPherson said his company is targeting corporations and small businesses, but that if demand for the service grows, it can also target the consumer market.

Both Hughes and IBM are already active in delivering data electronically, via both land and satellite systems.

The Hughes unit builds a variety of satellite-based networks for data, voice and video transmission. Last month it launched its DirectTV satellite-delivered television service, and the company has over 70,000 terminals operating on more than 240 satellite networks in 40 countries.