Sun chief lambasts trading exchanges

Scott McNealy, chief executive at Sun Microsystems, has turned his critique towards trading exchanges - the current boom technology that provides Sun with significant revenue from sales of its high-end servers.

In a speech delivered at US software company Tibco's annual summit, McNealy questioned the wisdom of establishing trading exchanges.

In a reference to the Ford AutoXchange, McNealy asked: "Why are Ford and all those others outsourcing their purchasing to competitors? I don't get it."

McNealy suggested the boom in dotcom market capitalisation is driving traditional bricks and mortar companies into buying in technology that can be easily built in-house. "You could put a handful of tattooed folk with plenty of body art into a room and they'll get an auction site developed in a few weeks," he said.

Although McNealy's remarks fly in the face of dotcom activity, the audience agreed with him. From a straw poll of around 800 attendees, 65 per cent said they believe the greatest value to be derived from internet based trading will come from bricks and mortar businesses. Although this was a self selecting audience, some analysts agree.

In a recent report, Scott Latham, senior business-to-business analyst at AMR research, said the promise of disintermediation by independent trading exchanges in particular is under threat. "If the choice comes down to established relationships and supply chain capability versus a dotcom website, we bet on the established intermediaries every time," he said.