Here come the heavy weights to the EIP market. This should force further consolidation in this segment.
SAP, Yahoo to Create Business Portal
dailynews.yahoo.com
By Siobhan Kennedy
NEW YORK (Reuters) - Europe's biggest software maker SAP AG (SAPG.DE) said on Wednesday it struck a pact with Internet media giant Yahoo Inc. (NasdaqNM:YHOO - news) to create a U.S.-based unit to develop portals for the corporate market.
The two will face stiff competition from the likes of Microsoft Corp (NasdaqNM:MSFT - news), Oracle Corp. (NasdaqNM:ORCL - news) and International Business Machines Corp.(NYSE:IBM - news). Those companies also are targeting the market for corporate portals, which analysts expect to be worth more than $13.2 billion by 2003.
The move comes as Yahoo struggles to diversify its revenue base in the midst of a massive slowdown in online advertising that has led the Internet bellwether to issue an earnings warning and temper its growth outlook.
Although Yahoo has had its own corporate portal -- a business version of its consumer portal that also provides access to a business's own software applications -- for nine months now, it has only signed up 18 customers in that time.
Partnering with SAP gives Yahoo immediate access to SAP's 13,000-strong corporate customers, many of whom may not have considered a consumer-driven company like Yahoo for the their business portal needs, analysts said.
``It gives Yahoo credibility in the corporate market,'' said Bruce Richardson, an analyst with industry research firm AMR Research in Boston. ``Let's face it, 18 customers is not exactly big traction.''
SAP, on the other hand, is looking to shake its image as a stuffy and expensive back office software giant. It too has had its own corporate portal product, the mySAP.com Workplace, for well over a year. But so far, it has really only been SAP customers that have used it, Richardson said.
``This deal provides a framework that makes the mySAP portal strategy make sense,'' Richardson said. ``SAP gets access to Yahoo's 2,500 content partners without having to go and sign individual agreements with all of them separately.''
Business Portal Market Set To Explode
SAP and Yahoo were going after a market currently worth $4.4 billion, and growing to $13.2 billion by 2002, said SAP chairman Hasso Plattner, citing figures from Merrill Lynch.
But SAP and Yahoo face tough competition.
Currently, companies such as Plumtree Software Inc., Viador Inc. (NasdaqNM:VIAD - news). and Epicentric Inc. are the leading business portal players, but analysts said every large software firm, including giants such as Microsoft, Oracle, IBM, Sybase Inc. (NasdaqNM:SYBS - news) and BEA Systems Inc. (NasdaqNM:BEAS - news), will try to muscle in.
``If portals are going to become the new user interface, then Microsoft's not going to sit back and let that happen,'' Andy Warzecha, an analyst with industry research firm The Meta Group, said in an interview at the time.
Plattner said SAP, along with its newly acquired portal partner TopTier Software, would work with Yahoo to deliver two versions of the portal some time in the next quarter.
``We want to reach not 1 million, not 10 million, but 100 million enterprise users,'' said Plattner.
The basic version will offer Yahoo's content plus access to some basic employee software, Plattner said. The professional version will provide access to all of SAP's applications plus consulting services to link to software from other companies such as Oracle, PeopleSoft Inc. (NasdaqNM:PSFT - news) and Siebel Systems Inc. (NasdaqNM:SEBL - news).
SAP has set up a new division, SAP Portals, in Palo Alto, California, to market and sell the software, which will also be sold through SAP's global sales channel and by Yahoo.
Yahoo will continue to sell its enterprise portal product, but SAP will no longer sell its mySAP.com Workplace software, Plattner said.
Revenue Stream Not Yet Clear
Neither company would give details about their joint business model but Plattner told Reuters SAP and Yahoo would share an upfront fee to license the portal software, then charge for additional, premium services, on top.
U.S. analysts said the move, however, would do little to boost Yahoo's beleaguered stock, which is off more than 90 percent off year-ago highs. It closed up 9 percent, or $1-1/16, at $12-7/16 on Nasdaq.
Tim Koogle, Yahoo's chief executive told Reuters he did not know how much revenue Yahoo expected to generate from the partnership with SAP.
``But it's a major growth space,'' Koogle said.
He said Yahoo's business services contributed to less than 10 percent of its overall revenues for 2000 but that financial analysts were expecting that to double in the next year.
Josh Greenbaum, principal of Daly City, Calif.-based Enterprise Applications Consulting, was more cynical.
``There's a lot of PR value to be had in linking SAP's portal strategy on the Yahoo brand, but the two companies are going to have to prove that there's more to their synergy than brand awareness,'' said Greenbaum.
``Portals today are not a burning need in corporate America, and the two companies will have to do a fair amount of market education to make portals a must-have,'' he said. ``Just checking the weather isn't going to be enough: there has to be more.'' |
