Commerce One, SAP take aim at i2 with new joint product

Siobhan Kennedy

NEW YORK: Commerce One Inc. and SAP AG, taking aim at a market dominated by
i2 Technologies Inc., are planning a venture to launch software that allows
manufacturers to streamline the purchase of raw materials by collaborating with
suppliers over the Internet.

The jointly developed software, which enables companies to set up online
marketplaces that links buyers and suppliers and enables them to share product
plans and designs online, will be available at the end of March, Commerce One
and SAP said at Commerce One's eLink user conference in Berlin.

Although Commerce One and SAP formed an alliance for online exchanges in June
last year, Commerce One vice president Kevin Schick, of product marketing, told
Reuters the existing version of their joint platform, called MarketSet, featured
only "loosely coupled" software from the two vendors.

But the new version will include tight integration between Commerce One's
electronic commerce software and SAP's supply chain applications, which enable
companies to share their product planning and purchasing details with partners
and suppliers, Schick said in an interview on Tuesday.

"It's a very competitive move against i2. I would say the two leading
contenders in the direct procurement, collaborative commerce market are now
Commerce One and SAP against i2," Berquist said. While the first generation
of online exchanges focused on indirect procurement, or the buying and selling
of finished goods such as office products and services, over the Web, the second
generation is focused on software that automates direct procurement, or the
buying and selling of raw materials.

Inefficiencies in procuring raw materials cost manufacturers billions of
dollars a year, analysts said. But they say bringing the systems on line, and
enabling buyers and suppliers to share inventory, demand and planning data, will
help cut those costs dramatically.

But with Ariba and i2 continuing to launch products that encroach on each
other's territory, many analysts say the alliance is all but over, leaving the
door wide open for Commerce One and SAP. To that end, the two vendors used
Commerce One's conference this week to gather momentum for their alliance by
announcing a host of new joint customer wins.

Brokerage firm Credit Suisse First Boston said in a research note Tuesday
that SAP was key to Commerce One's international success. "SAP's global
installed base of 13,000 and 50 per cent applications market penetration level
in Europe provides a rich revenue stream," CSFB said. "Release of
MarketSet 2.0 at the end of this month will further accelerate new
opportunities."

Commerce One stock fell $2-5/8, about 11 per cent, to $21-3/8 on Nasdaq on
Tuesday, while i2 lost $5, or 13 per cent, to 33-3/16. SAP's shares traded on
the New York Stock Exchange fell $1.54, or 3.5 per cent, to $42.80.

(C) Reuters Limited 2001.