ARBA, CMRC
Ariba, Commerce One hog b-to-b spotlight
Complete article at:
upside.com
Both Transora and eHitex bring up an interesting question: Which company, Commerce One or Ariba,
has the best strategy to tackle the supply-chain needs of large, online trading exchanges? Remember,
the big prize in b-to-b e-commerce is direct goods procurement -- allowing companies to buy online all
the really important materials that go directly into production. Neither Ariba nor Commerce One has
the chops to win this game alone, so they're partnering, but in widely different ways.
Ariba and its two big partners, IBM (IBM) and i2 Technologies -- otherwise known as "The Alliance" --
are working to integrate the strongest features of their respective technologies, while allowing each
company to maintain its own identity.
Commerce One and SAP (SAP) have gone back to the drawing board, using each other's software
code as the foundation for an entirely new product that will be jointly developed by a combined team of
engineers....
So, I guess I'm saying it's impossible to handicap this race just yet, but it's hard to argue with Ariba's
success so far. More than half of Ariba's 150 marketplace customers have gone live, even though many
of the transactions are relatively simple catalog buys or online auctions.
Investors clearly love the Ariba story, which favors upfront software license fees over long-term
recurring revenue (that will change soon, Ariba executives insist.) But why fight it? Ariba stock trades
north of $152 per share, giving the company a whopping $36 billion market cap.
It's hard for Commerce One to compete with that. The company is taking the opposite approach,
betting that long-term recurring revenue from its online marketplaces will make software license fees
look like chump change. The company may be right, but investors and analysts still take the "what have
you done for me lately?" approach, so Commerce One doesn't get the love that Ariba enjoys.
Commerce One trades around $70 per share, with an $11 billion market cap. |
