This story was written by Keith Dawson for the Industry Standard's Media Grok email newsletter. It is archived here for informational purposes only because The Standard's site is no more. This material is Copyright 1999-2001 by Standard Media.

B to B, or not to B
May 02 2000 12:00 AM PDT

If Dustin Hoffman's character in "The Graduate" found himself at the same cocktail party today, the guy would probably lean over and boozily confide: "B2B." Some might find the subject as boring as plastics was to young Benjamin, but the dollar figures are in the billions.

Yesterday, three of the five largest PC makers said they would set up a separate company to run an online marketplace for their electronics parts and procurement needs. Compaq (No. 1), Hewlett-Packard (3) and Gateway (5) expect the move to save them 5 percent to 7 percent on procurement costs. Joining the box makers in the announcement were nine manufacturers and suppliers of chips, disks and so forth. The yet-to-be-named startup will get rolling in the summer as a hoped-for 20 founding members contribute a hoped-for $100 million.

Most of the coverage paraphrased Hewlett-Packard CEO Carly Fiorina on the size of the market for electronic components: $600 billion per year. But which year? The Washington Post's Reuters copy said, enigmatically, "$600 billion in total sales of high-tech components over the few years." The Houston Chronicle's AP story claimed that the figure represents a projection for 2004. The Financial Times put quote marks around Fiorina saying "within the next two years." All agreed that Fiorina expected the new marketplace to handle a third of whatever the dollar volume turns out to be.

Writing in the Wall Street Journal, Gary McWilliams concentrated on the guests who declined to sit at this particular table: IBM, Intel and Dell. An IBM spokesman told the Journal that Big Blue would announce a competing marketplace in the next couple of weeks, joining "nine of the biggest electronics companies in Korea, Japan, the Nordics, Europe, Canada and the U.S.," whom he wouldn't name. Hmm. Intel declined to comment to the Journal but told the Financial Times, "We are not willing to make a commitment to an exchange at this point." Several outlets reported that Dell wants to continue going it alone.

The Journal's McWilliams quoted Bruce Temkin of Forrester Research opining that a combination of the e-savvy IBM, Intel and Dell "would be more impressive than a bunch of strangers trying to figure it out from scratch."

The Journal rounded out the B2B picture by covering two other marketplace announcements expected today, in the hotel and specialty metals industries.

Christina Binkley wrote on the plans of Hyatt and Marriott to lead a B2B initiative in hotel supplies, a $50 billion business in the U.S. A professor at Cornell's hotel school told Binkley that hotel supply is an ideal candidate for the Internet's tender efficiencies: "It's big, it's messy and there's a lot of pain." - Keith Dawson

Rivals Form Parts Exchange
Financial Times

Top Computer Makers, Suppliers to Create B2B Company (REUTERS)
Washington Post

12 Computer Firms to Form Net Market (AP)
Houston Chronicle

PC Consortium to Set Up Exchange for Components
Silicon Valley

Compaq, Gateway, Hewlett-Packard Plan Online B-to-B Parts Exchange
Wall Street Journal
(Paid subscription required.)

Marriott International, Hyatt Plan Web Venture for Supplying Hotels
Wall Street Journal
(Paid subscription required.)

Major Specialty-Metals Manufacturers Join to Create Electronic Marketplace
Wall Street Journal
(Paid subscription required.)