From Briefing.com ----Story Stocks-- yesterday--
B2B Update : Since we have taken a break from the B2B Stock Brief series, a brief update of recent events in the horizontal B2B sector seems appropriate. Though there has been a steady stream of press releases announcing new deals in the sector, the big picture still looks the same. The leaders continue to lead; in fact, Commerce One (CMRC) and Ariba (ARBA) are dominating the sector. They are quickly locking up large chunks of the digital marketplace business. Both companies began as providers of procurement software, but both saw the potential for online marketplaces. Commerce One was initially more aggressive in this area, highlighted by its GM deal. And CMRC continues to lead the way in the international arena; this morning, the company announced an agreement to establish Deutsche Telekom MarketPlace--a B2B marketplace and trading portal. But Ariba has stepped up the pace over the past month, acquiring online marketmaker Tradex and announcing a string of deals, including a joint venture with EDS (EDS) and today an energy industry marketplace in conjunction with Chevron (CHV). Ariba and Commerce One lead the B2B sector in market cap (not counting companies such as ORCL, which is not a pure play), and for good reason: they are grabbing the most land in this great land grab. The rest of the B2B horizontals are struggling to keep up. PurchasePro.com (PPRO) and VerticalNet (VERT) are both opting for the "build it and they will come" model in the hopes of attracting the small to mid-size business market. But thus far, it's not clear that there is much of a market here. Unlike the Global 2000 market, the small to mid-sized business market is still unproven, making these companies riskier propositions despite their smaller market caps. FreeMarkets (FMKT) has also been struggling after being stung by the loss of the GM business to CMRC. As we wrote at the time, the loss of GM was an eye-opener for FMKT and called into question its ability to compete against early leaders CMRC and ARBA, both of which have been incredibly successful at redefining themselves as providers of marketplace solutions rather than just procurement software. As has been the case in so many Internet sectors, first mover advantage has proven extremely valuable for horizontal B2Bs. ARBA and CMRC are making the most of their opportunity, making life rough for the rest. - GJ
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