The high-tech exchange, called HightechMatrix.com, will be owned and operated by i2 Technologies and provide electronics manufacturers, distributors, and their trading partners the ability to negotiate purchasing and coordinate production plans via a Web portal.

Greg Brady, president of i2 Technologies, estimates that the company could potentially channel $100 billion of trade through HightechMatrix.com. Compaq CEO Michael Capellas says his company is committed to moving the $25 billion in trading it does with suppliers each year onto the exchange. HP also plans to conduct tens of billions of dollars in commerce with suppliers through the portal. Both companies expect to simplify their procurement processes, cut inventory costs, and improve customer service by using the system.

Sanjiv Sidhu, CEO of i2 Technologies, says that participants in the exchange can customize links to trading partners. Compaq and HP each have a unique way of working with customers and suppliers. They don't want to compromise that, Sidhu says. I2 Technologies, which will take a percentage of each transaction, plans to introduce additional industry-specific marketplaces as part of TradeMatrix, its business-to-business marketplace project.

Analysts say the effectiveness of business-to-business exchanges has yet to be proven, but the theory is sound. Joshua Greenbaum, a principal of Enterprise Applications Consulting, says, "If you can get everyone involved and get them to buy into the technology and central control, everyone can save a lot of money."