The Pleasanton, Calif.-based company today said it is teaming with business-to-business software maker Commerce One to build trading exchanges for other companies, using PeopleSoft software.
Enterprise resource planning companies have made their fortunes selling human resource, supply-chain management and financial applications to big businesses. The shift to online exchanges, analysts have said, is a natural extension of these companies' existing business. Analysts have estimated that the business-to-business market will grow to between $2.7 trillion and $7.3 trillion by 2004, from about $131 billion in 1999.
The venture follows earlier moves by PeopleSoft competitors SAP, Oracle, Baan and J.D. Edwards in the business-to-business market. Earlier this month, SAP announced plans to form a subsidiary focused solely on business-to-business.
Like its competitors, PeopleSoft has been trying new ways to expand its product line to include e-commerce and other Web-based capabilities. Earlier this month, the company detailed its new application service provider division, called PeopleSoft eCenter. As previously reported, the new division will manage, host and support PeopleSoft's business applications for start-ups and larger companies.
"This is very critical for PeopleSoft because their bread and butter was the human resources product, which hasn't done so well. They needed to make a strategic move into e-commerce to offset that," said Harry Tse, an analyst with the Yankee Group.
Business-to-business ventures typically set up an online marketplace connecting buyers and sellers of products in a specific industry. Firms with specialized software and online exchanges promise to drastically decrease the cost of doing business, thereby increasing profits.
PeopleSoft and Commerce One have teamed in the past to develop an electronic sales channel for PeopleSoft customers by integrating the PeopleSoft Order Management module with Commerce One's MarketSite.
special coverage
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Following are the latest developments in the antitrust suit filed against
Microsoft by the Justice Department and attorneys general from 19
states.
Latest stories DOJ, state conflicts compromise Microsoft settlement Growing tensions among the Justice Department and 19 state attorneys general have compromised settlement negotiations in the Microsoft antitrust trial, sources say. (March 29, 8:05 a.m. PT)
No ruling in Microsoft antitrust trial
Talks go on as Microsoft proposal is scrutinized
Government unimpressed with Microsoft settlement offer
Microsoft offers to settle antitrust case
Microsoft, DOJ may be closer to settling
Klein says serious antitrust remedy sought
Analysts say settlement possible in trial
Harvard professor mutes antitrust skepticism
"Plausible benefit" is key phrase in antitrust trial
Microsoft case in last hearing before final ruling
Could Microsoft open source code to settle?
Breakup dissension not stopping Microsoft settlement talks
Poll shows most oppose breakup
Microsoft trial a battle of public favor
Friends, foes file comments in antitrust case
DOJ, states counter Microsoft filing
DOJ, states to rebut Microsoft's antitrust arguments
• Two suits filed against Microsoft in Ohio • Judge taps Posner to fight "divergent" government views • Will Microsoft class-action suits spawn more? • Judge appoints mediator in Microsoft antitrust case • Microsoft faces legal scrutiny at every turn • Drama unfolds in wake of judge's ruling
• Judge calls Microsoft a monopoly • Microsoft faces uncertain penalties in case • Judge: Microsoft's monopoly power hurt many • Microsoft's competitors "delighted" • Microsoft investors weigh impact on stocks |
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Increasing dissension among state plaintiffs may largely remove them from settlement negotiations in the trial, said sources close to the talks. The DOJ now finds itself at odds not just with Microsoft but with its partners in the case.
Also, there are indications that Microsoft may have drawn a line in its willingness to negotiate a settlement. Microsoft chief executive Steve Ballmer said yesterday that the company has already made more concessions during settlement talks than would be ordered by the courts should Microsoft be found guilty. Ballmer made his remarks yesterday in an email message sent to more than 30,000 Microsoft employees and examined by CNET News.com.
U.S. District Judge Thomas Penfield Jackson had been expected to rule yesterday but delayed action to allow settlement talks to continue.
The mediating judge in the case, Richard Posner, has set an aggressive meeting schedule through next Wednesday that would appear to favor DOJ negotiators, according to a report in The New York Times this morning.
Late yesterday, the extent of the states' role was not clear, other than that they have two days to ratify a settlement agreement, should there be one. But Posner could call the negotiations at an impasse if there is no agreement by next Wednesday. Jackson is expected to rule by the end of next week should talks stall.
"If only Microsoft and DOJ were talking, this would all be over now," said a person familiar with the talks.
Ballmer, in his email message, indicated that the software maker has reached the extent of its concessions. "We believe we've put more on the table than the judicial process would ultimately provide, even if we lost the case," Ballmer said. Ballmer also repeated a concern echoed throughout the proceedings: "Any settlement must preserve our ability to innovate and improve our products," he wrote.
Ballmer also indicated Microsoft's intention to hold its ground. "While we're very sure of our legal position and we're prepared to take it all the way on appeal, we've learned that discretion is the better part of valor, so we are working very hard to resolve the case through settlement," he wrote.
In recent weeks, the DOJ accepted that it might not get a decisive victory after a protracted appeals process and softened its stance on breaking up Microsoft. But some hard-liners among the states would rather take their chances with a ruling, said government sources.
Until last week, the talks proceeded along fairly quietly, an indication that both sides were negotiating sincerely, said Rich Gray, an intellectual property attorney with Outside General Counsel Silicon Valley in Menlo Park, Calif.
But a series of leaks about the settlement talks, which Posner ordered to be kept secret, "left little doubt the government camp is fragmented," Gray said.
Convincing any part of the government camp it needs to settle is the difficult task Jackson handed to Posner, who heads the U.S. Court of Appeals for the 7th Circuit in Chicago.
When Jackson issued his "findings of fact" on Nov. 5, he delivered to the government what appeared to be an almost certain victory and the means of breaking up the software maker.
That document was akin to winning the lottery and not knowing what to do with the proceeds, said legal experts. "You couldn't have convinced the Justice Department and the states when they started this thing they would get such a one-sided finding in their favor," George Washington University Law School professor Bill Kovacic said.
But in the months that followed, the DOJ and 19 states discovered their potential victory was bittersweet. The DOJ's change of heart may have a lot to do with the cool reception it got after attempting to win support from industry and consumers on breakup.
In a Valley visit last December, U.S. Assistant Attorney General Joel Klein failed to rally significant support for breakup among high-tech companies, said sources familiar with the trip. That trip, which involved high-level meetings with Oracle, Sun Microsystems and other staunch Microsoft critics, convinced few of Microsoft's adversaries that a breakup was warranted.
As Microsoft's stock dropped in February and March, state attorneys general started hearing from their constituents, among them institutional buyers affected by the stock changes and troubled about their investments, said several sources in the states.
Following final oral arguments last month, it was no longer clear the government would get a clean sweep, Kovacic said. The government might only win four of its six major arguments with Jackson's ruling. If an appeals court knocked out two more, there might not be enough left to warrant breaking up Microsoft.
While these factors mollified the DOJ and some states, hard-liners among the states held fast to their belief the only way to deal with Microsoft was to break it up, said sources close to the talks.
Even if Microsoft and the government's chief negotiators reach an agreement, all 19 states, as well as Jackson, must approve the deal for it to stand. The states could break their case off from the DOJ's, if they are dissatisfied with the outcome, although many legal experts said that would be unlikely.
If negotiations do collapse, the government's softened position for settlement is no guarantee it will seek only conduct remedies should Jackson rule in the case.
"This is absolutely what hard-line states want," said a source familiar with the discussions.
Business software maker Baan today said it plans to form a new subsidiary aimed at providing customer relationship management software to dot-com start-ups and Internet companies.
The as-yet unnamed subsidiary, is expected to open in June, based in Golden, Colo. The new unit will focus on selling companies its customer relationship management (CRM) software and services. Those products include Web-enabled applications that automate a company's sales, marketing and customer call center needs, as well as procurement software and sales configuration software.
Today's move highlights changes taking place at the struggling firm, as it pushes forward with a broader strategy to focus on the Internet, the business-to-business e-commerce sector and more lucrative markets for business applications, such as CRM software.
In the past few months, the Dutch firm has been troubled with financial hurdles and an executive management shuffle. In January, the company issued a profit warning and announced the resignation of CEO Mary Coleman. Since then, the company's stock has plummeted as it implements a company-wide reorganization announced in the beginning of the year.
Like its rivals Oracle, SAP, PeopleSoft and JD Edwards, Baan has been shifting its focus to providing Web-friendly front-office software and moving away from its core business--software that manages a company's back office, such as its human resources, manufacturing and financial needs.
The market for CRM software continues to grow at a fast rate. According to market research firm International Data Corp., the worldwide market for CRM software is expected to reach $11 billion in 2003, up from $1.9 billion in 1998.
Baan said its new subsidiary will give the firm a direct focus on the Internet, helping companies that do business online use CRM software to improve their customer relationships, including building retention and improving service. The subsidiary is also designed to take the firm into new markets, the company said in a statement.
Lycos is pulling a page out of Idealab's book.
The Web portal today announced that it is creating an Internet "incubator" called LycosLabs to produce start-up businesses.
LycosLabs will invest in and build up to 12 start-ups a year, the company said. The company will help fund firms focusing on Internet technology, content, commerce and community, Lycos said. It also will provide start-ups with office space and the necessary technology.
The new division is the company's second foray into capitalizing on start-ups. In July, the company formed Lycos Ventures, a $70 million venture capital arm, in collaboration with Microsoft co-founder Paul Allen's Vulcan Ventures.
Incubators are established to turn business plans into companies. They often take a significant stake in a start-up and then supply it with services such as marketing, facilities and sales. Other prominent Internet incubators include Bill Gross' Idealab, CMGI and eCompanies.
"We have had tremendous success with Lycos Ventures and other corporate investments, and as a result have seen the remarkable potential for earlier-stage involvement in new businesses, where we could not only realize a great return on our investment but also provide a source of innovative new ideas for the Lycos Network," Lycos chief executive Bob Davis said in a statement.
Three leading video game companies have sued Yahoo over the alleged sale of illegal goods on its auction and stores site.
Nintendo of America, Electronic Arts and Sega of America filed a lawsuit in U.S. District Court for the Northern District of California, charging that Yahoo has permitted its users to sell illicit copies of video games and illegal devices used to copy video games. The video game companies offered the possibility that they would ask for an injunction on the sales and for damages of as much as $100,000 per infringement.
"At Yahoo Auctions and Yahoo Stores, sellers have been openly and notoriously trafficking in the sale of counterfeit and unpublished video games and illegal devices," the companies charged in their complaint. "Some of the video games and/or hardware listed for sale on Yahoo's sites are authentic, including--just as in any flea market--people selling used game consoles, controllers, and games. On any day, however, Yahoo's sites offer for sale scores of illegal products."
A Yahoo spokeswoman declined to comment on the lawsuit, saying Yahoo had not seen it yet.
The lawsuit comes as the traffic and sales of pirated software and music face increasing scrutiny.
In December, the Recording Industry Association of America sued Napster, charging the start-up company with copyright infringement because people using Napster have traded pirated copies of music through its network.
Meanwhile, last fall, eBay bowed to pressure from software manufacturers and banned the sale of software and music on recordable compact discs and backup software packages to stem illicit sales. The move followed a survey by the Software & Information Industry Association (SIIA) that indicated that 60 percent of the software titles on eBay, Excite Auctions and ZDNet auctions were pirated.
And last spring, Novell sued a Texas company for allegedly selling pirated copies of Novell's NetWare software on eBay. At about the same time, Microsoft began scanning online auction sites for pirated software.
The video game companies have alleged that Yahoo refused to take down the illegal auctions despite being notified of them and despite having technology that would have allowed it to police the auctions. Additionally, the companies charged that Yahoo profits from the sales both through selling ads on its auction pages and charging auction sellers to prominently display their auctions.
While Yahoo has yet to respond to the lawsuit, those points could be damaging to the company, said attorney Rich Gray of Outside General Counsel of Silicon Valley.
"The plaintiffs here generally have a strong case against Yahoo," Gray said.
Intel introduced two new Celeron processors for budget computers today that will kick off another cycle of competition in the consumer PC market.
As expected, the Santa Clara, Calif.-based chipmaker unveiled two new Celeron processors running at 566 MHz and 600 MHz. While faster than current Celerons, the two new chips also contain the multimedia enhancements found thus far only in the Pentium III line, according to Jeff McCrea, director of marketing for desktop processors at Intel. The chips are in fact identical in many respects to the more expensive Pentium III and are manufactured on the same wafers, he said.
As a result of the faster speeds, multimedia enhancements and other features, the chips achieve benchmark scores that are at least 10 percent higher than existing Celerons, he said.
"For multimedia applications, you can get 30 to 36 percent improvement. For 3D, you can get 50 to 56 percent improvement," he said.
The new chips will go into sub-$1,000 computers. A number of computer manufacturers will likely adopt the chips.
The company will then follow up in late April with two more Celerons, running at 633 MHz and 667 MHz. A 700-MHz Celeron, which in February was slated for the second half of the year, may also come out toward the end of the second quarter.
Rival Advanced Micro Devices, meanwhile, will counter with new notebook processors in the next few weeks and a version of Athlon, code-named Spitfire, for budget PCs toward the middle of the year. Spitfire will displace the K6-2 in cheap consumer desktops, company executives have said.
Along with raising the performance bar in the budget segment, the new processors will help Intel improve manufacturing efficiencies, McCrea said. The structure of the new Celerons is fairly identical to the core of the Pentium III.
The key difference between the two is that Pentium IIIs contain 256K of integrated secondary cache. The Celerons contain transistors for 256K of integrated cache, but only 128K of the cache eventually gets activated. The difference in cache sizes gives the Pentium III an inherent performance advantage.
The similarity, however, allows Intel to manufacture both lines on the same wafers. In the end, this means more chips per wafer. "With this, we can increase our manufacturing flexibility," McCrea said.
Overall, the differences between the new Celerons and the Pentium III line will be how the chips are marketed and the type of computers in which they are used. Celerons, for instance, will largely come with chipsets that use standard memory and have integrated graphics. Pentium IIIs typically get paired with faster Rambus memory and almost always come with higher performance graphics chips.
The system bus--the main data conduit between the processor and the rest of the computer--runs at 66 MHz in Celeron computers, while it hits 100 MHz and 133 MHz in Pentium III systems, he added.
The Celerons also will generally come to market at lower clock speeds (the MHz number), but this is largely a function of how the manufacturer markets them, analysts have said. These chips can run at faster speeds but are tested and sold for performance at lower speeds.
The 566-MHz chip will sell for $167 in wholesale quantities of 1,000, while the 600-MHz will sell for $181 in the same quantities. Retail prices for single chips at computer stores will typically be higher, although some dealers may offer it for less in the future. Like fresh produce, retail chip prices fluctuate constantly with supply. A number of computer manufacturers likely will adopt the chips for sub-$,1000 computers.
NEW YORK--The U.S. Patent and Trademark Office is expected to change the way it examines and awards patents in Internet-related areas, according to reports.
The PTO is aiming to take a more detailed look at past practices and inventions before making decisions, The Wall Street Journal reported, citing PTO commissioner Todd Dickinson.
The reforms are the result of criticism that some patents, particularly those awarded for "basic Web techniques," are standing in the way of innovation in online business by giving exclusive rights to practices that aren't unique or new, the Journal reported.
The PTO granted a record 169,154 patents during 1999 to individuals and companies worldwide, an increase of about 6,000 from 1998.
Copyright 2000, Bloomberg L.P. All rights reserved. The sale rack no longer sits solely in the basement of a careworn factory. Now it's on the desktop too.
RetailExchange.com, spun off of New York-based Gordon Bros., a 75-year-old retailer that specializes in close-out sales, has built a marketplace for manufacturers and retailers to trade excess inventory.
The company, which launched mid-February, now hosts more than $100 million in off-price retail products. It also said this week that Ames Department Stores, which operates 460 stores in 19 eastern states, is using its site to buy off-price inventory.
"Exclude autos on one side and fresh vegetables on the other side, and we'll sell everything in between," touts company chief executive Ken Frieze, who is a former executive and board member at Gordon Bros. The company currently has four departments, including apparel and home goods, with more than 1000 listings from "hundreds" of manufacturers, according to Frieze.
The touchstone of such online marketplaces is the community. By connecting thousands of buyers and sellers, e-marketplaces can help make a stilted, money-losing sale process into an efficient, more profitable transaction.
Typically, retailers looking to buy or sell overstock inventory would go through a broker, or "jobber," who profits from knowing the industry intimately and often keeps information close to the vest.
Through an online exchange, however, companies can access a whole world of buyers, thereby creating a more competitive market for their products. Higher demand drives up prices and can turn excess inventory--often sold at a loss--into a modest profit.
Buyers are interested in off-price merchandise because it bolsters their margins, and through such sites, retailers such as Bloomingdale's and Macy's can pick and choose products that fit into their merchandise mix. Buyers can search on the site by merchandise, department, manufacturer name and price, as well as the discount percentage off wholesale.
For buyers, the service is free; however, RetailExchange charges sellers $25 for a listing and 5 percent on each completed sale. All companies must register and be approved as valid operations before they can buy or sell products.
Getting rid of traditional brokers may be a plus for companies selling surplus, but the loss of their knowledge in a deal can be a minus for buyers.
"Brokers give companies inside information (to a product or company). A Web site can't replicate the intelligence of the broker," Williams said.
According to Forrester Research, sales at online marketplaces for consumer products will reach $300 million in 2001, and reach about $29 billion in 2004, 2 percent of total industry sales. Industry executives estimate the total market for wholesale goods in the United States is worth $25 billion annually.
These numbers are attracting several competitors.
TradeOut.com, founded in October 1998, launched early last year and targets the surplus inventory market, among other industries. The Ardsley, N.Y.-based company filed for a public offering last week, and, backed by eBay, signed a partnership with Yahoo this week to offer listings through Yahoo's new business-to-business marketplace.
E-commerce veteran QRS last year launched Tradeweave.com, an online marketplace for the retail industry. And i2i.com, a "horizontal" marketplace that also hosts many different industries, recently partnered with the National Retail Federation, a consortium of more than 3,000 member companies.
For all the competition, RetailExchange believes industry expertise and backing give it a wedge for acceptance in a market that centers on relationships. Gordon Bros. owns a majority stake in the company, and Internet Capital Group invested $11 million in December for a 25 percent stake.
In retail, the brand image of a product is paramount to its success in stores. Companies such as Saks Fifth Avenue and Bradley often need to know and trust the company that is buying their brand name.
"A marketplace is something that leaves a product's brand wide open--it runs in reverse to how manufacturers protect their brand," said Rick Villars, vice president of Internet and e-commerce at research firm International Data Corp. "RetailExchange addresses the brand management issue."
A "channel control" feature on the site lets sellers designate which companies can buy their goods. For example, a company can say: "I only want to sell these goods outside the United States or to discount department stores. Or I want to sell to Sears but not to Kmart." The service then filters out all other requests.
Signing up the buyers and sellers could prove the most difficult task for online exchanges. Many traditional manufacturers and retailers are not tech-savvy, though they may have efforts to become so underway.
"They need to show they can grease the wheels" by providing the products and the back-end services such as financing, credit and negotiation tools, said Steve Kafka, e-business analyst with Forrester Research.
Buyers and sellers negotiate such issues as the shipping terms through discussion threads on the site, much like instant chat, and the sale can be finalized online or offline. RetailExchange said it plans to offer credit options from the site later this year.
Because so many specialized exchanges are cropping up, industry observers say that no one marketplace will reach critical mass, a key factor to success.
"Eventually you'll see online marketplaces link together because they can't make it without each other," said Don Gilbert, senior vice president of information technology for the National Retail Federation. "If the exchanges are linked, then you bring more sellers together for more efficient pricing."
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