PC giants plan B2B exchanges

PC companies and their component suppliers are dividing into two camps - one led by Compaq and Hewlett Packard (HP), and the other by IBM - to create online exchanges to cut the cost of manufacturing PCs.

On Monday, 10 companies joined with Compaq and HP to announce its as yet unnamed exchange. Within hours, IBM rushed out a statement saying it was planning a similar B2B market with nine companies and that an official launch would take place within 30 days.

Calls to Intel, which supplies the microprocessors in some 80 per cent of the world's PCs, to find out if it plans to join either group were not returned.

AMD is in the Compaq/HP group, and Carly Fiorina, HP's chief executive, would say only that she had talked to Intel chief executive Craig Barrett, who was supportive of the concept.

The other founding members of the Compaq/HP alliance are fellow PC maker Gateway together with suppliers Hitachi, Infineon Technologies, NEC, Quantum, Samsung Electronics, SCI Systems, Solectron and Western Digital.

Compaq chief executive Michael Capellas said that membership of the group is open to any relevant business. It is only three weeks ago that Fiorina first called Capellas with the idea, and they had agreed principles within 10 minutes, she said. The new company will be up and running within three months.

The plan is for companies to increase their buying power and drive down costs by having the ability to order more standardised parts for PCs, printers and servers. The PC components business is estimated to be worth $600bn annually.

Fiorina said that the PC makers expect to see savings of between five per cent and seven per cent, which could lop around $150 off the price of a PC.

The exchange will be run by a board created by representatives from all 12 companies. An initial public offering is part of the group's future plans but nothing is confirmed yet, said Capellas.

Few details are available about IBM's plans. The company declined to name its nine partners.