bob,
Ariba, i2 on the outs? SAP, Commerce One engaged?
September 08, 2000
by Adam Feuerstein
I'm in the mood to speculate, spread rumors and generally raise hell (I'm a b-to-b yenta!), so let's get started.
The much-ballyhooed b-to-b ménage-a-trois between IBM (IBM), Ariba (ARBA) and i2 Technologies (ITWO) is headed for a cold shower. Says who? Says Eric Upin, a b-to-b analyst with Robertson Stephens.
"This partnership is like two best buddies who try to share the same girlfriend -- it just doesn't happen," says Upin, in an interview conducted during his firm's Internet conference, held this week in San Francisco. "I really think they were doomed from the moment they put out their press release."
Yo, Eric, tell us how you really feel! Well, Upin has a lot more than snide comments to contribute to his argument. The way he sees it, Ariba and i2 are too aggressive, too successful, in their own right to jump into bed together. The problem, he says, is that both companies are on a collision course because each wants to be the pre-eminent builder of Internet exchanges. And both companies believe, stubbornly, that they already possess all the tools in their utility belts to make it happen, so who needs the other guy?
I've talked to executives at all three companies about this issue before, and all insist rumors of marital discord are just that. The alliance has won contracts to build the technology platform for six exchanges so far, and a $90 million advertising campaign portrays Ariba, IBM and i2 as a b-to-b dream team.
But Upin gets paid the big bucks to look beyond the hype, and he sees cracks in the façade.
"When I talk to the companies, you see subtle clues that point to retrenchment already," he says, mentioning the fact that the three companies don't seem to be making any real progress on joint product development or joint sales efforts.
[An interesting footnote: When i2 presented at the Robbie Stephens conference on Tuesday, the company's executives didn't mention Ariba or the alliance, at all. Strange?]
If the alliance does stick together, it will be due to Herculean efforts by IBM, the soothsayer who is currently keeping everyone happy, he says. More likely, he believes, IBM will jury-rig an alliance. Ariba and i2 won't actually work together, but IBM will use technology from each company, add them to its own middleware and professional service capabilities, and go to market with a "complete" online exchange platform.
If it works, exchange customers won't know, or care, that behind the scenes, i2 and Ariba aren't playing nice.
Says Upin: "This was a marriage of convenience, an opportunity that Ariba and i2 both felt was too good to pass up, but I think both companies really wish it would just fade away."
SAP and Commerce One sitting in a tree ...
OK, let’s move on. What about the SAP-Commerce One merger rumor? As you already know, SAP (SAP) has invested about $300 million in Commerce One (CMRC). The two companies are working very closely on a joint product to power online exchanges. Two customers have already been announced, and four more exchanges, as yet unnamed, have also chosen the SAP-Commerce One platform, according to a published report quoting Chuck Donchess, Commerce One's chief strategy officer.
In other words, SAP and Commerce One are in serious "like" mode, so why not take the relationship "to the next level?"
Upin, again, has an opinion (don't you just love people who love a soapbox?).
"This partnership is the real thing. It has money, it has deals, so there are many good reasons for the relationship to move closer," he says.
Upin is not betting the farm on an outright merger, but he does believe that SAP may finally be shedding its image as the Teutonic titan of software -- a company with the hubris to believe it can succeed entirely on its own.
"SAP could have acquired i2 or Manugistics (MANU) to become a major player in the supply chain market. The company let Siebel (SEBL), Kana (KANA) and others dominate CRM [customer relationship management], and it totally missed the Broadvision (BVSN), Vignette (VIGN) space," he says. "SAP must change if it wants to stay relevant, so maybe it realizes that a merger with Commerce One would be a smart move."
And then there's Ventro
While we're on the subject of merger rumors, let's end with a whopper and chat about Ventro (VNTR). The somewhat beleaguered operator of six online marketplaces canceled a scheduled presentation at the Robbie Stephens show. It also pushed back an analyst briefing, scheduled for next week, until later this fall. Ventro officials say nothing is amiss -- the cancellations were coincidental -- but that is not going to stop me from believing Ventro CEO Dave Perry has something cooking.
Hell, why not make a prediction (or a suggestion): Ventro is going to merge with VerticalNet (VERT).
Here's my reasoning: VerticalNet, for all its blather about being the baddest b-to-b boy on the block, doesn't have much in the way of commerce. Yes, the company operates 57 vertical marketplaces, but most of those are populated with supplier storefronts that are not much more than static advertising and community placeholders.
Ventro, on the other hand, knows how to actually conduct b-to-b e-commerce. It's marketplaces, especially Chemdex, actually bring buyers and sellers together to conduct real business. That's what VerticalNet needs.
Blair LaCorte, VerticalNet's chief strategy officer, said during his Robbie Stephens talk that the company was "getting serious" about its b-to-b strategy, and is especially keen in pumping up its e-commerce capabilities.
What would Ventro get out of a merger? The company is struggling a bit these days, especially when it comes to getting enough buyers and sellers signed up to its marketplace -- an area where VerticalNet could help. And Ventro has told the Street that it will run 10 marketplaces by the end of the year, a goal few think it can attain. A merger with VerticalNet gives it access to more vertical industry markets, immediately, than it could ever do solo.
Do the financials pencil out? I'll leave that to someone with more number-crunching expertise than I have, but I did run the idea by one analyst I respect, and he agreed with my thinking.
I guess time will tell, but if I'm right, I may just open a b-to-b dating service. |
