Jockeying For Position

Dec. 21, 2004
Battle for control of e-marketplaces heats up.

Software companies, industry groups, and manufacturers are doing some pretty heavy jockeying for position to see who will ultimately control the 21st century e-marketplace. In the latest scramble for e-hegemony, supply-chain software vendor i2 Technologies Inc. in late December unveiled plans to start its own electronic marketplace to buy and sell high-tech goods. Never mind the fact that two years ago an industry-wide consortium of more than three dozen leading high-tech companies had established a similar program named RosettaNet, which is expected to be up and running this month. i2's, part of the software firm's larger announced last October, will offer procurement capabilities, including catalog, request for proposal, request for quotation, auction, and bidding, as well as a host of collaborative features enabling companies to deal with their suppliers online. Sanjiv Sidhu, CEO of i2, says will differ from other online procurement systems in that it will be "tightly linked into suppliers' fulfillment and planning processes." But RosettaNet has basically the same objective -- to enable its member high-tech companies to align the business processes that support their supply-chain activities. According to Colin Evans, director of e-business strategy at Intel Corp. and chairman of RosettaNet's board, members "will be able to enter an online inquiry or order, then the transaction will seamlessly permeate the supply chain as far as necessary to get an immediate answer to availability, location, price, and delivery schedule." Officials of RosettaNet declined to comment on the i2 announcement, saying they hadn't had a chance to study it. For its part, i2 claims its trading portal will be compatible with RosettaNet's standards, but will offer greater capabilities to users. "We are RosettaNet compatible, but we also [will] offer additional capabilities beyond that," says Mark Jensen, vice president of the global high-tech business unit at i2. i2 sees itself in the driver's seat, with an estimated 72% of electronics firms, including nine of the 10 largest computer makers in the world, using its production scheduling and supply-chain management software, according to figures from Benchmarking Partners Inc., a Cambridge, Mass., IT research firm. But RosettaNet ranks among its members some of the largest technology firms in the world, including Microsoft Corp., Intel, NEC Corp., Hewlett-Packard Co., Ingram Micro Inc., Compaq Computer Corp., SAP AG, Sterling Commerce Inc., Solectron Corp., Siemens AG, Cisco Systems Inc., CompUSA Inc., Electronic Data Systems Corp., and GE Information Services. Hewlett-Packard, a member of both initiatives, takes the view that at least for the time being there will be more than one virtual marketplace, and that to participate in several is simply sound business practice. "Before a common platform comes along, there is always this confusion and chaos," observes Rajiv Gupta, general manager of HP's e-speak effort, a program to create a standard platform for e-commerce transactions. Gupta notes that his company also participates in CommerceNet, a global industry consortium of companies that promotes e-commerce. The struggle over the virtual high-tech store is similar to what's taking place in the automotive industry. In November Ford Motor Co. sidestepped the Automotive Network eXchange (ANX), a two-year-old initiative by the industry at large, by enlisting database giant Oracle Corp. to build it a separate, Internet-based supply chain called AutoXchange. Ford sought to jump-start its virtual supply-chain effort, rather than wait for ANX, which had signed up only a few hundred member firms, to get its act together. Likewise, General Motors Corp. decided to set up its own supplier trading exchange with e-providers CommerceOne, Yahoo! Inc., and, yes, i2 Technologies. GM has opened the program to other auto manufacturers. Both Ford's and GM's initiatives have cast doubt on the viability of ANX. "The jury is still out on the future of . . . ANX," states a January report by AMR Research Inc., a research firm in Boston specializing in manufacturing technology. Ultimately, i2 has plans to create other industry-specific e-marketplaces that would compete with existing ones. Thus, i2 may compete with current online marketplaces for chemicals, steel, and other goods and will take a fee for each transaction conducted over these digital markets. Typical fees charged by e-marketplaces range from 1% to 15% of the value of the transaction. With approximately 1,000 or more online marketplaces in use today, it's likely that most manufacturers will end up using more than one. The idea, says HP's Gupta, is that more, rather than less, choice is good for competition. "There should be multiple e-marketplaces," Gupta says. Otherwise, he adds, "It will be a shame if people are required to take sides and participate in one but not another."

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