Two key indicators have confirmed that interest in business-to-business (B2B) software slumped last year, but the future is not all gloom, say industry watchers.
Ariba saw its revenues tumble to $55m from $170m the previous year. Commerce One reported revenues of $191m a year ago; this time it could only muster $56m.
The slump should not alarm customers, according to Laurent Lachal, senior analyst at Ovum. "They both have enough cash to survive for at least another year. At worst, they have good technology and would be good acquisitions," he said.
The problems facing the two are markedly different. Competition has heated up in the buy-side market, where Ariba specialises.
With the likes of SAP and Oracle making strides in this area, Ariba may find itself an acquisition target, explained Lachal. "Key to success will be how they differentiate themselves," he said.
Ariba predicted that the second half of 2002 will see its fortunes return. In addition to announcing several new customers as part of its financial report, president and chief executive Bob Calderoni maintained that the company could achieve a breakthrough by June.
"Our spend management strategy and product suite is resonating with new and existing customers," he said.
Commerce One is facing a different set of problems. "Public marketplace B2B has collapsed somewhat," said Lachal. "Its best bet will be to become more focused. There is still interest in private exchanges."
With the latest version of its B2B suite due for release in the first quarter of 2002, Mark Hoffman, chairman and chief executive at Commerce One, said that the company is positioned to take advantage of the expected economic turnaround.
"Commerce One 5.0 is engineered to deliver the short-cycle return on investment solutions customers are demanding," he said.
Despite the tough times, there were sound reasons why the two B2B specialists would not be squashed by heavyweights like Oracle and SAP, explained Lachal.
"They are more nimble. They understand the issues better. The technology is better. They have good integration with back ends. Where firms are looking for flexibility, Ariba and Commerce One will do well," he said.
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