Janice and All,
Here are two more articles on the Intel/SAP joint venture. I think the first article answers many of the questions Janice posed yesterday.
Regards,
Jules
Intel, SAP form joint venture to sell E-commerce gear
By Kourosh Karimkhany
SAN FRANCISCO, Aug. 5 (Reuter) - Intel Corp. (INTC) and German business software giant SAP AG (SAPG.F) said on Tuesday they formed a joint venture that hopes to get a cut of the $234 billion economy that is expected to develop on the Internet.
The venture, called Pandesic, will sell all the hardware and software necessary for on-line merchants to sell consumer and capital goods through the global computer network. Pandesic will charge a small percentage of each transaction.
The venture would take on companies such as International Business Machines Corp. (IBM), Electronic Data Systems Corp. (EDS) and Microsoft Corp. (MSFT)
As more of the world's commerce takes place on line, even a fraction sliver of the market would mean hundreds of millions of dollars in annual revenue, analysts said.
``These companies are real serious about this,'' said Bobby Cameron, senior analyst at market researcher Forrester Research Inc. Forrester predicts that $234 billion in consumer and capital goods will be bought and sold through the Internet by 2002.
Intel and SAP said each is prepared to throw lots of money and technical resources into Pandesic. Each owns 50 percent of the venture, based in Sunnyvale, Calif. Harold Hughes, Intel vice president in charge of planning, will become Pandesic's chairman. Bryan Plug, SAP executive vice president, will become president and chief executive.
Other financial terms of the joint venture were not disclosed.
Intel's shares have surged in recent days, partly in anticipation of the formal announcement of the venture, analysts said. In late afternoon trading, Intel shares were up $2.50 at $99.25. With Nasdaq trading of 18 million shares, it was the most active stock in U.S. markets.
In Frankfurt trading, SAP shares rose 50 pfennigs point to 424.50 marks a share.
SAP, based in Waldorf, Germany, is the world's biggest publisher of business management software. Pandesic would help SAP expand into a much faster-growing part of the computer services market, company executives said.
Microprocessors from Intel, based in Santa Clara, Calif., control the basic functions of 80 percent of the world's personal computers. Lately, the company has been expanding its business to dominate other parts of the world's computer infrastructure, such as networking gear.
Pandesic also would help make Intel's Pentium microprocessor part of the foundation of the electronic bazaar.
Intel and SAP would share the revenue and profit from Pandesic on a 50-50 basis. The companies plan to make most of their money by taking a small cut from each transaction that flows through a Pandesic system -- much like credit card companies get a small percentage of each purchase.
Craig Barrett, Intel president and chief operating officer Barrett would not say how much revenue Pandesic expects. He said the company will be in an ``investment phase'' for at least the first year.
Currently, only a few companies offer in a single package all the hardware and computer programs needed to set up a commercial catalog site on the World Wide Web.
Pandesic would not only supply the hardware, but also the order-entry system, the inventory management and replenishment software, the financial programs and the distribution logistics software.
The company said customers would receive technical support from companies such as USWeb Corp. and Hewlett-Packard Co. (HWP)
Pandesic will roll out its services in the United States first and then expand globally, Barrett said.
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