The joint venture of International Business Machines Corp. and Diebold Inc., a dominant supplier of automated teller machines, next week will unveil a new generation of ATMs guaranteed to perform 99% of the time.

Besides representing a new option for banks in the market to buy ATMs, the new IBM-Diebold line could pose problems for U.S. banks that have already installed some 11,000 IBM cash machines.

The new ATMs will be compatible only with existing Diebold equipment. That means users of current IBM machines may face the prospect of buying new ATMs sooner than planned, because less-costly upgrades will no longer be an option.

Debut Set for ABA Convention

InterBold, the firm formed by the two companies last year, plans to announce the new series of ATMs at the American Bankers Association annual convention in San Francisco next week.

While some bankers are looking look for more bells and whistles on their ATMs, InterBold officials said they plan to emphasize the new machines' nuts and bolts instead.

The new "i" models do have all the latest ATM features - they can be equipped to dispense postage stamps, print account statements, display images of deposited checks, and perform a variety of ther functions in vogue with bankers seeking increased fee income from their ATM fleets. The cash machines have also been modified to increase access for disabled users.

But InterBold executives said a more significant improvement to the new ATMs is improved reliability that should greatly reduce their cost of operation - so much so that the company is offering a money-back performance guarantee.

Refunds for Poor Performance

If over any three-month period an "i" series ATM works less than 99% of the time, InterBold will refund part or all of the service-contract charge for that period. For example, if the ATM runs less than 95% of the time during any quarter, the service contract for that period is free, company officials said.

The emphasis on reliability is InterBold's effort to polish a tarnished reputation the company inherited because of the poor performance of Diebold's earlier Modular Delivery System ATM models. According to InterBold officials and industry sources, Diebold's original MDS ATMs, sold in 1985 and 1986, experienced serious mechanical problems.

"When something like that happens, you live with the residue for a while," said Gregg A. Searle, vice president of U.S. sales and marketing at InterBold, which is based in North Canton, Ohio.

All of the "i" series hardware features - including Braille-embossed keyboard and an jam-resistant device for dispensing cash and documents - are installable on earlier models of Diebold MDS ATMs.

Overhauls Relatively Cheap

A complete overhaul of Diebold's oldest MDS ATM takes about eight hours and can cost less than $8,000, compared with the $20,000 to $30,000 price tag of a new "i" series machine. A number of such conversions have been done in the past year, InterBold officials said.

The news is not so good, however, for the owners of IBM-manufactured ATMs. While the company's ATMs can be networked effectively with any of the new InterBold models, the "i" series hardware upgrades are not compatible with the older IBM machines.

Despite that drawback, however, analysts and industry sources said the "i" series of ATMs represents a product improvement for a company that has struggled to make its name known independently of those of its parent companies.

Interbold is also in a neck-and-neck race for domestic ATM market dominance with arch rival NCR Corp.

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