InformationWeek

October 16, 2000

Bizmodel.com
The spin on startups, Web commerce, E-markets, and Internet strategies

Edited by Brain Dakss (bdakss@cmp.com)

This Four-Way Combo A New Way To Gov
Teaming dot-coms with established players isn't new, and neither are dot-com mergers. But last week's launch of eChips combines both approaches in a four-way merger designed to produce a large online resource for buyers of semiconductors and electronic components.

The deal joins two electronic commerce and content sites, ChipCenter and Questlink.com, with units of two major electronics distributors, Arrow and Avnet. Two other companies with investments in ChipCenter, i2 Technologies and CMP Media (InformationWeek's parent company), also become investors in eChips. Financial terms of the deal were not disclosed.

The four-way model is the best way to leverage players with established industry strength and unique Internet capabilities, says Sean Powers, eChips' chairman and CEO. "It gives you lower customer acquisition costs and trusted fulfillment sources."

--Clinton Wilder

A Changing Marketplace Landscape?
Psst. Not all dot.coms are dying. Pass it on! The number of independent trading exchanges will soar in the next two years, and by the end of 2002 their number will quadruple to more than 5,000, according to a report from Jupiter Research.

Jupiter says the need for companies to tie product demand to supply chains and fulfillment will fuel the growth of the independent exchanges. Businesses that don't incorporate them into their strategies risk losing their competitive edge.

The report predicts failures and consolidations among the independent exchanges, but those that die will be far outnumbered by successful exchanges with smarter business models.

Independent exchanges may get only a small slice of the business-to-business pie--estimated at $2 trillion to $6 trillion by 2005. But even companies that do business on mega exchanges such as Covisint will need independent exchanges, Jupiter VP John Katsaros says. For example, today there are more than 150 independent exchanges in the metals industry. Many of their customers are large suppliers and manufacturing companies who also use bigger exchanges.

--Steve Konicki

Visa Runs A New Kind Of Credit Check
Online merchants who've taken a casual approach to Web security may have to buckle down. Visa International has unveiled a self-assessment test that the merchants must pass to keep accepting Visa cards. It's part of a wider effort by the company to boost consumer confidence in Internet shopping.

Merchants can download the test from Visa's Web site (www.visa.com/secured) and use it to assess their security readiness, from hiring practices to their use of encryption technology, firewalls, and network and database security software. Visa has set standards that merchants must meet. Compliance is mandatory as of Nov. 15 for new merchants, while those already accepting Visa have until Oct. 1 next year to comply.

"Better security overall will increase consumer confidence and increase sales," says Frank Prince, an analyst at Forrester Research covering E-business infrastructure. The test is the first of its kind to be required by a payment organization, he says. Visa will also insist that Web retailers prominently display privacy policies and information about online security capabilities.

--Rick Whiting

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