Briefing.com on B2B
09:29 ET ******
Chemicals B2B : Another day, another industry B2B. Today, it is twelve companies in the chemical sector that are getting together to form a B2B exchange. Among the participants are Dow (DOW), DuPont (DD), and BP Amoco (BPA), together with many Asian and European companies, making this a truly global exchange. As with the many other industry exchanges, this one will be owned by the participants. Its initial capitalization is expected to be $150 mln and the company will be established in July. In the past, we have written quite a bit about the implications of these exchanges for the B2B pure plays -- most notably, we have noted that the prospects for transactions-based revenues had dimmed a bit as industry ownership of the exchanges would reduce the power of the Aribas (ARBA) and Commerce Ones (CMRC). These company's stock prices now adequately reflect that reality, and it is notable that they are still doing solid business and getting plenty of transactions-based deals. But perhaps the most threatened B2Bs are the vertical players, whose very existence is threatened by the industry exchanges. In the chemicals sector, there are no public pure plays yet, but ChemConnect and Chematch.com have already filed for IPOs, and ChemCross.com, e-Chemicals, and fob.com probably were hoping that they would follow soon. But when the leaders in any industry decide that they will jointly establish and own a B2B exchange, the vertical players in the industry have one hope -- be signed on as the technology provider for that marketplace. The problem is that it's not happening. Ever. All of the major B2B exchanges are turning to the leading horizontal B2B players for technology: most notably Ariba, Commerce One, i2 (ITWO), and Oracle (ORCL). You don't see many (any?) exchanges turning to vertical players within the industry. It shouldn't be any surprise that Chemdex changed its name to Ventro (VNTR) and tried to recreate itself as a horizontal B2B. But after a brief spike to 243 1/2 on the news, it plummeted to its current level of 24. Most verticals have suffered a similar fate and it's not hard to see why. These industry-sponsored exchanges present a very real threat to their viability. The message is clear: get horizontal or get lost. - Greg Jones, Briefing.com |
