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Strategies & Market Trends : Gorilla Game Investing in the eWorld -- Ignore unavailable to you. Want to Upgrade?

To: gdichaz who wrote (628)	11/11/1999 2:51:00 AM
From: tekboy	Respond to of 1817

Still More Briefing.com on B2B (and CRM) AEA Part III [BRIEFING.COM - Gregory A. Jones] The AEA is all about information overload. Eight company pitches each day can be overwhelming to digest, much less to pass on in any meaningful manner. But pass it on we will. As was the case yesterday, we will once again offer tidbits of the AEA in today's Brief. In coming days and weeks, we will be revisiting these companies and their industries in greater detail. CRMs The customer relationship management (CRM) sector has been on fire lately, which prompted us to drop in on the presentations of Vignette (VIGN), Silknet (SILK), and Interwoven (IWOV). Vignette is a direct competitor of both SILK and IWOV, though SILK and IWOV products themselves are actually complementary (technical point -- IWOV is better described as content management than a CRM, but there are many blurred lines in this area). One point that immediately stood out in all three of these presentations is that we are in a hyper-growth phase of this industry. All three companies report that time-to-market is one of the key factors driving their customers' software decisions. Both traditional bricks & morter businesses and Internet companies are rushing to get their ecommerce sites online, and the CRMs are the beneficiaries. As one analyst joked to the Silknet CEO, it's not about technology anymore, it's about execution. And indeed that will be the challenge in the year ahead for these companies. Demand is not the issue at this stage; it is there and it is huge -- the ability to meet that demand is the issue. Having trained sales staffs is critical, and all of these companies are struggling to keep up with demand growth. As is always the case with the software industry, this demand surge will ultimately abate and average selling prices will fall as well. This is probably still a year or two off, but for buy and hold types, it is worth considering this eventuality. The big questions for this sector over this time frame -- which we will revisit in the future in greater depth -- are just what type of software solutions companies will demand. Will they want the horizontal solution that Vignette offers, or will they opt for best-of-breed options such as Interwoven and Broadvision (BVSN)? B2B Wannabes Many traditional enterprise software companies have seen their valuations eclipsed overnight by B2B newcomers such as Ariba (ARBA) and Commerce One (CMRC). We came across two of these at the AEA -- Harbinger (HRBC) and HNC Software (HNCS). Both face one clear struggle -- rebuilding their brands as Internet brands. As barnesandnoble.com (BNBN) would probably tell you, being the first in bricks & mortar doesn't ensure that you're first on the Internet. It very difficult to recast a brand as an Internet brand. That is the challenge for HRBC and HCNS. Harbinger has the more interesting story, primarily because it is getting into the potentially lucrative B2B transactions arena. Harbinger has already inked a deal to create a B2B marketplace totalling $15 bln in transactions yearly in the grocery sector (its cut will be "seven figures"). It has also allied with Sun and Netscape to create a petroleum market. HNC Software has created an eHNC division and will soon see the IPO of its spin-off Retek (a retail industry B2B company), but its success in the Internet sector is far from certain. Its eHNC division, which it claims will be the Inktomi of the MSPs (merchant service providers), has only logged $1 mln in revenues thus far. Chips Ahoy In the chip world, we visited PMC Sierra (PMCS), Aware (AWRE), and Globespan (GSPN). Aware and Globespan are competitors in the DSL chipset business, and both have seen their fate rise and fall along with that of DSL generally. A visit with these two companies is an exercise in the futility of DSL standards. There is ADSL full rate, ADSL G.lite, HDSL, HDSL2, SDSL, VDSL, and there are different modulation standards -- CAP and DMT. There is also confusion about who is doing what with whom. Aware's stock was hit in the summer months by talk that the company might lose its business with Cisco (CSCO). Aware's CEO said that he believed that this talk surfaced from Globespan, and that it was not true as Globespan only ships its CAP chipsets to CSCO, and AWRE's chipset designs for CSCO are DMT. But then Globespan's CFO says that GSPN ships chipsets to CSCO that support both CAP and DMT. And there's more. AWRE recently announced an unspecified deal with Intel (INTC) that Aware's CEO would still not define. INTC is a GSPN customer, but Globespan's CFO says that Intel's networking division didn't do the deal; it was INTC's semiconductor division, so GSPN's business was not in danger. Confused? You should be. I was. PMC Sierra, on the other hand, had a clean story. PMC's communications chips are used in routers, access multiplexers, DSLAMs, and other high-end devices that are at the core of the Internet. This market is booming and PMCS has all the blue chip telecom companies as customers: CSCO, NT, LU, and ERICY to name a few. After the morass of DSL, the PMCS story was a breath of fresh air. Remember -- even though the AEA is over, Briefing.com will have many more reflections on the conference in coming days. Greg Jones - gjones@briefing.com