Putting a Price on IT Savvy

SAN MATEO (05/20/2000) - As e-commerce business models mature, online winners are creating additional revenue streams by reselling technology and intellectual property to other industries.

Parlaying existing product lines into new businesses is standard practice, but industry leaders and analysts say that the Internet is giving companies a wealth of new opportunities.

For example, by the end of the year, online auto sales giant autobytel.com will repackage the technology it uses for referral-based marketing for other service-based Internet sites.

"[Our company] knows how to insert itself at the buying moment and allow customers to compare and contrast prices, while at the same time lowering a dealer's sales costs," said David S. Grant, CTO at autobytel, in Irvine, California.

At a high level, the content becomes irrelevant, noted Grant, adding that autobytel will act as an exchange for companies in which autobytel will "marry content with the business process."

The company is not alone. United Parcel Service is repackaging its online logistics technology in a new partnership with Ford Motor Co. The pilot project, currently under way in three states, will see UPS reapply its expertise in managing, tracking, and delivering packages to the auto industry.

As Ford moves to a build-to-order business model, it hopes to use UPS to reduce delivery times from 16 days to seven days.

"You would never think to apply UPS package-delivery ability to autos, but the value is in the logistics; the package is just a commodity," said Scott Crompton, director of Global Automotive Practice at SeraNova, in Edison, New Jersey.

The system, which will be operational in two years, will eventually help Ford deliver cars directly to a buyer's home, Crompton said.

Amazon.com is also seeking to extend the reach of its back-end logistics and supply-chain software and expertise to a broader number of suppliers, said Charlie Bell, vice president of IT infrastructure at Amazon.com, in Seattle.

Meanwhile, another e-commerce leader, Dell, announced its Expert Services Group, a business unit charged with reselling Dell's coveted intellectual property in e-commerce efficiency. Through deals with consulting companies Arthur Andersen and Gen3, Dell is selling its Internet secrets to those willing to pay the price.

"We do half our business over the Internet, and customers are asking us how we do it," said Jon Weisblatt, a spokesman at Dell, in Round Rock, Texas. "We are bringing to our customers the expertise and intellectual property that we've created over the years of doing business over the Internet. And I'm sure there will be other companies trying to license out their intellectual property."

As have many exchanges looking to break into new verticals, Chemdex, a business-to-business exchange for life sciences, earlier this year repackaged its expertise in creating marketplaces with the creation of Ventro, which will focus on building and running exchanges in other industries.

Analysts say that the intellectual capital underpinning much of the Internet economy is responsible for the ease with which companies can turn around their expertise and sell it as a product.

"The Internet is creating whole new opportunities for companies to turn [around] intellectual capital and resell it," said Steve Kafka, an e-business analyst at Forrester Research, in Cambridge, Massachusetts.

Kafka said that although the trend is growing the challenges of applying one company's experience to various other vertical markets could be tricky.

"It all depends on what they are trying to sell, because a new offering like this won't sell unless you have some depth," Kafka said.

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