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May 1, 2000

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E-Marketplaces Produce Strange Bedfellows

Sun Microsystems plays several potentially conflicting roles

By Matthew G. Nelson, Larry Greenemeier, and Cheryl Rosen

Related links:

  • E-Markets Are Expanding (2/28/00)

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    Companies of all sizes are teaming to develop online marketplaces for a variety of industries-and they're creating some odd couplings in the process.

    A deal revealed last week has Sun Microsystems playing the role of investor, customer, and supplier with Andersen Consulting in an as-yet-unnamed company that will provide E-procurement software and services on an outsourced basis.

    Andersen Consulting will be the majority owner of the venture, while minority investors Sun and iPlanet (a Sun-Netscape joint venture) will be charter customers and technology suppliers. The venture will buy up to $300 million worth of Sun and iPlanet goods over three years to build its infrastructure.

    Sun chairman and CEO Scott McNealy characterizes the venture as a slam dunk, saying procurement is something "every company in the world should outsource."

    Oracle and its e-Travel.com subsidiary are also forming a business-to-business marketplace to facilitate the direct purchase, fulfillment, and payment of travel and meeting services. The e-Travel Marketplace will offer credit and electronic-payment services so customers can avoid paying credit-card fees. In a sense, Oracle will be taking business away from some of its largest database customers-the traditional financial-services companies.

    Often-competitive airlines Air France, American, British Airways, Continental, Delta and United last week revealed plans to jointly create a marketplace for the purchase of fuel, engines, and maintenance services.

    Restaurantpro.com last week partnered with Bank of America, Cambridge Technology Partners, Commerce One, telecom company LMKI, OpenTable.com, and Chefstore .com to create a restaurant-supply marketplace. The venture will also provide restaurants with computers and high-speed digital subscriber line Internet access. The service will be free to restaurants that are Bank of America customers.

    Also last week, Lendx unveiled the Lendxsm Exchange to connect lenders and companies seeking financing. ShareYourWorld Inc. revealed a marketplace that lets individuals post photographs, which can be purchased by media buyers.

    The proliferation of marketplaces is staggering, says Bruce Richardson, a senior VP at AMR Research. He says this is a classic land grab, with very little revenue coming in at this point.

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