Briefing.com on B2B
11:16 ET ******
B2B Validation : The vast majority of B2C stocks now reside in the sub-$10 area, vindicating the views of
those who argued that e-tailers were nothing more than glorified catalog retailers, and that the very technology
that made their business possible would also undermine their pricing power. Money flows have long since
moved on to B2B, thus raising the very valid question of whether or not this latest hot sector was the real thing
or just another bubble. We have been arguing since the middle of last year that B2B is for real, and the last few
days have witnessed some substantial validation of that view. First and most important was last Friday's
GM/Ford/Daimler Chrysler announcement of a new B2B exchange for the auto industry. Prior deals between
Ford/Oracle (ORCL) and GM/Commerce One (CMRC) had already set the stage for this development, but it
was nevertheless dramatic proof of concept for B2B exchanges. Second was Monday's announcement that
Sears (S) and Carrefour have signed on Oracle to establish a B2B exchange for the retail industry. Though we
have only seen the beginning of this trend, there is no question that every major player in every industry is
aggressively planning to shift its B2B transactions online. The implications of not doing so are too severe -- the
potential cost savings are so significant that competitors who move first will be able to gain market share by
exploiting a cost advantage. Given that B2B exchanges are rapidly becoming a reality, the only remaining issue
is whether B2B companies truly benefit. The answer is yes. B2B companies develop the infrastructure
necessary to create these exchanges and the critical mass of participants to sustain them. In this regard, the
B2Bs are much different than the ill-fated B2C companies. In fact, despite the similar names, B2C and B2B are
not comparable sectors. B2C companies sell stuff to consumers. B2B companies develop the infrastructure that
enables businesses to sell stuff to other businesses. They are therefore much more akin to the software firms
that create B2C infrastructure such as Vignette (VIGN) and BroadVision (BVSN). Those firms have done
exceptionally well even as the B2C companies themselves have suffered. By the same token, B2B infrastructure
companies such as Commerce One (CMRC), Ariba (ARBA), and Oracle (ORCL) will do well even as business
suppliers in such sectors as autos are pressured by the introduction of B2B exchanges. - GJ
tekboy@toohungoverforjokes.com
PS Tef, re DI, I read a big story on Flip in some magazine recently (Red Herring? Standard? forget which) and I must say I was incredibly turned off by his outsized ego and braggadocio. Guy seemed like another Ellison, but without the Oracle. Was that impression wrong, or irrelevant to the company's prospects, or both? |
