IBM, Nortel help fund B2B exchange

IBM, Nortel help fund B2B exchange

IBM, Nortel Networks and several Japanese electronics manufacturers have launched a business-to-business online trading exchange to buy and sell computer components, electronics and telecom equipment.

The venture, dubbed, will compete with a similar planned business-to-business exchange that Hewlett-Packard and Compaq announced last month. Some $US200 million in funding will come from the eight founding members, along with investors Crosspoint Venture Partners and Morgan Stanley Dean Witter & Co.

The founding members of together do about $205 billion in annual spending, and they expect the system to handle millions of dollars worth of procurements when it launches this July, said Stephen Ward, general manager of IBM's global industrial sector division.

The founding members are Hitachi Data Systems, LG Electronics, Matsushita Electric Co, Nortel, Seagate Technology, Solectron and Toshiba. The main technology partners providing software and support for are Ariba, IBM, i2 Technologies and Aspect Development, which i2 is set to acquire.

IBM's Ward said the exchange would evolve out of a few existing business-to-business Web sites already in use today. The first is called Component Knowledge, used by about 4000 industrial manufacturers to exchange information about products.

The second is the Singapore Virtual Component Exchange, where manufacturers can consign surplus electronics for sale while not fully disclosing their identities, if desired.

John Mumford, partner in Crosspoint Venture Partners, has been named acting CEO of, which has launched an executive search to make a permanent management appointment.

"I have the view this is going to be the dominant player in the industry," said Mumford, acknowledging the growing competition in business-to-business exchanges.

At the same time, IBM, Nortel and other founders sought to emphasise that the new exchange will seek to use standardised technologies to further interconnection with sites outside

These technologies would include XML and the high-tech industry's specific XML document type, RosettaNet, to ensure interaction with outside exchanges as well.

"It would be nice for all of this to consolidate into one exchange, but that is unlikely to happen in the near term," commented Phil Fok, CEO of staff operations at Selectron. "We'll be lucky if we get down to just half a dozen."As it evolves over the next 12 months, is expected to be able to host product catalogues, process transactions, handle online auctions and support workflow-enabled procurement requests.

The venture intends to make money by charging membership fees and per-transaction fees, but these are not yet disclosed.

As to whether the founders would try to force their suppliers to participate in the exchange, IBM's Ward said that was a decision left solely to each exchange member.

Nortel's chief marketing officer, Charles Childers, said his company would definitely not force its suppliers to use, commenting that the efficiencies of online trading would spur interest in its use.

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