By Wendy Lee
Thursday, June 08 2000 07:13 PM
URL: http://www.zdnetasia.com/news/hardware/0,39042972,13028307,00.htm

KUALA LUMPUR--Hitachi, IBM, LG Electronics, Matsushita Electric (Panasonic), Nortel Networks, Seagate Technology, Solectron, and Toshiba, along with technology partners Ariba and i2, today announced the creation of e2open.com, an independent, global business-to-business (B2B) e-marketplace for the computer, electronics, and telecommunications industries.

The new e-marketplace will be hosted and built by IBM Global Services, using the technology of by Ariba, IBM and i2.

It will bring together thousands of computer, electronics and telecommunications companies--of all sizes, worldwide--to plan, manage and execute supply chain transactions over the Internet. Today, these companies account for approximately US$700 billion (RM2.66 trillion) of goods and services bought and sold in the worldwide electronics industry's supply chain.

According to a statement from e2open.com, operations are expected to begin by mid-July, with the roll-out of additional functions within 12 months. Under the leadership of acting CEO John Mumford, e2open.com will begin start-up operations immediately.

Recruitment of management is underway and the location of the operation will be determined by the new management.

In terms of ownership and financing, founders of e2open.com are expected to contribute up to US$125 million (RM475 million) in equity capital to the e-marketplace. Half of the e-marketplace's equity will be shared equally among the founders.

Crosspoint Venture Partners and Morgan Stanley Dean Witter--as the financial partners in e2open.com--are expected to commit US$80 million (RM304 million) to finance the start-up operations of the e-marketplace and will own 20 percent of the new business.

A significant share of the equity in the e-marketplace has been reserved for management. Additional equity will be available for issuance to future e-marketplace users and will be contingent upon their usage of the e-marketplace.

Mumford, who is also a founding partner of Crosspoint Venture Partners, said three characteristics differentiate e2open.com from other e-marketplaces.

"First, we're already in business and working together as partners. Second, we have a clear strategy to move forward, as evidenced by our decisions to build this e-marketplace on the technologies of Ariba, IBM and i2. And third, we are well financed, with more than US$200 million (RM760 million) of financing commitments," he said.

e2open.com is expected to offer buyers reduced infrastructure costs, reduction of unauthorized buying, lower working capital requirements through lower inventory, and transportation and logistics efficiencies.

Sellers meanwhile should gain from enhanced ability to service smaller customers, direct access to customers, lower customer acquisition costs, increased access to global trading partners, reduced transaction handling and processing costs.

Ariba expects to provide key components of the Ariba B2B Commerce Platform, including the Ariba Dynamic Trade for auctions, reverse auctions and bid-ask exchanges. Participants may also use the Ariba Buyer, ASP Edition, a hosted e-procurement solution to outsource the indirect procurement function of their organization.

In addition to providing WebSphere Commerce Suite software, IBM expects to license some key applications to the e-marketplace: its Singapore-based components exchange and an existing IBM-owned subscription service which allows electronic component manufacturers to collaborate on design and new business opportunities with marketing reps and distributors.

With the availability of the IBM components exchange, e2open.com launches with technology in place which is capable of handling more than US$1 billion (RM3.8 billion) in annual transactions. The e-marketplace expects to license additional technologies from the founding technology partners as well as from other future participants.

i2 will provide its TradeMatrix e-marketplace enabling technology that will allow multi-enterprise collaboration for demand management and supply chain management over the Internet.