Come Together

The consolidation is on!

October 9, 2000  e-Marketplace choices narrowed Monday for electronics industry buyers with the announcement of two mergers among current Net markets for electronic parts.

Components marketplace e2open will give its buying customers access to a catalog of 12 million electronics parts and to a hard-to-find parts service through PartMiner, a provider of marketplace technology and procurement services, according to an announcement from the two companies.

e2open's founding partners include Acer, IBM, Hitachi, LG Electronics, Lucent Technologies, Matsushita Electric (Panasonic) Industrial, Nortel Networks, Seagate Technology, Solectron and Toshiba, which together account for more than $200 billion of goods and services bought and sold.

Under the terms of their agreement, PartMiner will contribute its components catalog and technology, become the exclusive partner for sourcing hard-to-find electronic parts on e2open and act as the default market maker when supply and demand are unbalanced in the e-marketplace.

"PartMiner delivers content and technology to e2open, which augments our existing technology platform and value proposition," said Mark Holman, president and CEO of e2open. "Partnering with PartMiner allows us to integrate our complementary capabilities."

The two companies will reportedly begin the integration process this week.

Also on Monday, a pair of other electronic components marketplaces announced they would merge with divisions of two major brick-and-mortar players to create a new e-market, dubbed eChips. QuestLink and ChipCenter, the marketplaces, will join with the Arrow business unit of Arrow Electronics and the Production Supplies and Test Equipment (PSAT) unit of Avnet to form eChips, which will be headquartered in San Jose, Calif.

The new marketplace will combine QuestLink's repository of product reference data and online commerce engines; ChipCenter's online communities and editorial content expertise; Arrow's network of call centers for "direct" electronics component sales and service; and Avnet's PSAT distribution logistics and sales capabilities for "indirect" specialty products that support manufacturing and test.

Arrow, Avnet, CMP Media Inc. and i2 Technologies Inc. are major industry investors in the new company. Arrow and Avnet have agreed to an e-catalog marketing and fulfillment arrangement with eChips.

Security holders in QuestLink Technology, Inc. and ChipCenter LLC must approve the merger, which must also be passed on by antitrust regulators. Avnet announced that its PSAT unit, which distributes electronics production supplies and test equipment, would join eChips after the merger is completed, which is expected by the end of this year. Financial details of the merger were not disclosed.

If the merger goes through, eChips will start operations with 350 employees in three countries, more than 50,000 existing customers and more than 300,000 registered on-line users. The company is anticipating first-year revenues of more than $100 million.

e-Commerce analysts are predicting that e-marketplaces will see a wave of similar mergers and alliances as the Net markets struggle to find a profitable revenue model and to compete with the private-label exchanges and consortiums set up by coalitions of brick-and-mortar enterprises. Cambridge, Mass.-based technology consultancy Forrester Research, for example, is predicting that only 200 of the 1,000-plus current marketplaces will still be around in 2003.

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