Vendors unite on $1b high-tech company: Analyst warns of hidden agenda in cartel-like behaviour

In an unprecedented show of solidarity, Hewlett-Packard, Compaq Computer, NEC, Gateway 2000, Advanced Micro Devices and seven other high-tech powerhouses have struck a massive deal to create a new Internet-based company, Computerworld has learnt.

However, an e-business industry analyst has warned that users may be confronted by cartel-like behaviour.

Designed to act as an Internet exchange, the as-yet unnamed company is expected to start operation by the end of July, with its founders each ploughing $US100 million into the venture. The companies have agreed to form the e-marketplace to address the inefficiencies of the supply chain for the computing and electronics industries by offering everything from auctions, catalogue management to collaborative product design services and online supply commits.

The exchange's end-to-end services will be available to all parties in the supply-chain process, including consumer and business electronic makers, contract manufacturers, suppliers and distributors.

But, Lane Leskela, research director for e-business intelligence services at Gartner Group, said that "potential customers may believe there is a hidden agenda to set prices and service levels".

He said that while there are positive synergies to be made by aggregating strategic suppliers, these e-marketplaces may be more focused on locking in competitors and controlling their environment than on customer care.

And despite the founders' assertion they will have equal ownership of the newly-formed company, this may prove more difficult to execute, according to Leskela.

"The initial problem will be defining market territory in this highly strategic early stages of the partnership," Leskela said.

The problem with equal ownership arrangements such as this is "no company is going to sign something that looks like this", he added.

However, no distributors are represented yet, an oversight Leskela urges the founders to rectify.

"One of the difficult elements in Internet environments is fulfilment, where distributors play a key role as integrators of services," Leskela said.

"The founders should make it clear who the partnering distributors are and detail their function and role."

Initially, the exchange will offer: auctions; catalogue management; value-added services, such as a news ticker and market place administration.

Future offerings will include: demand forecasting; inventory visibility; capacity utilisation; on line supply commits; reverse logistics; additional value-added services (factoring, escrow); on-line conventions; trading agents and collaborative product design services.

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