IBM leads hi-tech online exchange

IBM has hooked up with seven other industry giants to set up a business-to-business online marketplace for the computer, electronics and telecoms sectors.

Together with Hitachi, Toshiba, Matsushita Electrical Industrial Co (Panasonic), LG Electronics, Nortel Networks, Seagate Technologies and Solectron, the partners are investing $125m into E2open.com. The site is expected to be operational next month.

The move is the latest in a series of similar ventures being created in many diverse industries to facilitate the buying and selling of products and services online. The aim is to improve competition and reduce supply chain costs.

The companies claim the network will shift around $700bn in goods and services. E2open.com will include existing exchanges such as TradMatrix, a services exchange; Component Knowledge, an information exchange for manufacturing representatives; and Virtual Component Exchange, which buys and sells semiconductor intellectual property.

Analyst firm Zona Research applauded the site's quick rollout plans. "With transaction values more than double the next closest nexus site, this should give E2open.com considerable credibility, clout and staying power right from the start."

However, the company pointed out that the US government is considering whether such exchanges need to be monitored for fear of monopolistic tendencies.

Overall, Zona said E2open.com should succeed because the players are heavy-hitters, most have already worked together as partners, and the technology is fast approaching the equivalent of off-the-shelf, plug-and-play status.

Fellow research firm Forrester Research has praised the partnership's inclusion of Asian companies, because the region is expected to be the second largest internet economy by 2004.