IBM Counters Rivals with Own B2B Hub

Responding swiftly to news that Hewlett-Packard Co., Compaq Computer Corp. and Gateway, Inc. are launching an online marketplace for supply chain management, IBM disclosed Monday that it is developing a similar Internet marketplace for purchasing and inventory control.

Working with at least nine other electronics industry heavyweights, IBM’s new marketplace could well be powered by the company’s own software. However, Ariba and i2, two companies that IBM has previously worked with, may be chosen as the software suppliers.

Although there was no formal announcement, IBM’s general manager of industrial sector business Steve Ward said in published reports that the company’s component purchasing exchange would be based on an existing standard for such online marketplaces known as RosettaNet. RosettaNet is a non-profit, self-funded consortium that develops and deploys standard electronic business interfaces for supply chain partners.

The IBM exchange reportedly will include other computer makers, as well as consumer electronics and telecom suppliers. According to Ward, the companies involved will each have “ten figures of purchasing size.”

Last year, IBM spent $13 billion (US$) on the Internet for parts.

Big Blue Strikes Back

IBM’s announcement, while seemingly timed to steal some thunder from Hewlett-Packard, comes as no surprise to industry observers — especially since Big Blue is HP’s most formidable rival.

Hewlett-Packard CEO Carly Fiorina was not caught off guard by the news that her company’s nemesis would pose competition in the marketplace.

“We have spoken to IBM,” Fiorina said. “They are committed to the same philosophy. It is under consideration what role they would play. We would be delighted if they would join us,” she said.

Keith Melbourne, general manager of Hewlett-Packard’s trading community business unit, is optimistic that a joint effort is feasible among all the players.

“It’s still possible for the marketplaces to inter-operate or potentially combine,” he said. “There is no exclusivity.”

Will IBM Snub its Rivals?

In all likelihood, the marketplaces will co-exist peacefully and even cross over now and then. Even Ward concedes, “In general, these exchanges will have to inter-operate.”

In the new world order of high-tech competitors combining resources and forming alliances, IBM has often asserted its independence. Recently, however, IBM has joined with Ariba and i2 to integrate the business-to-business technologies of the three companies and collaborate on marketing them to customers.

In that venture, IBM will take equity stakes in both companies, and contribute its e-business hardware, software and services capabilities, as well as its global marketing reach.

It was a strategic business move both from a revenue standpoint, as well as for IBM’s internal operations. IBM will become one of the alliance’s first major customers when the company starts using technology from its two partners to capture and manage a major portion of its $45 billion in annual procurement spending.

In a similar move several weeks ago, IBM Global Services launched Component Knowledge, a B2B communications hub aimed at mediating complex interactions between trading partners of electronic components.

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