Inc. (NASDAQ: ARBA) has purchased privately held TRADEX Technologies, Inc. for
$1.86 billion in stock, based on the closing price on the date of the announcement.
Ariba sells software that lets companies engage in E-procurement, and manages
marketplaces that bring together its buy-side customers with vendors. Ariba's
marketplaces are primarily for MRO (maintenance, repair and operations) products.
TRADEX sells software that allows its customers to build and manage Internet
has been obvious for a while that Ariba needed to make a move into the incredibly
fertile arena of vertical markets. The acquisition of TRADEX lets it do that
without the pain of developing sophisticated user-level software. At the same
time, Ariba acquires some strong assets from TRADEX's toolkit, especially its
We see this move opening new markets for Ariba's marketplace activities. For
every industry in which a vertical market offers specialized products, there
is still a need for the same old cleaning supplies, copy paper and carpet protectors.
There will be strong incentive for any company wanting to build a vertical market
to use Ariba's forthcoming solutions to get what should be painless access to
both the special products and the mundane ones. With TRADEX under its belt,
Ariba can help its customers roll out vertical markets by the thousands, creating
a huge magnet for companies of all stripes that want to latch onto the promised
savings from E-procurement.
is a lot that can happen in the E-procurement market, especially where the huge
North American and worldwide markets for consumables are concerned. However,
the continued strong moves by Ariba and Commerce One (See TEC News Analysis
One Goes High, Wide and PeopleSoft" December 27th, 1999) seem likely
to assure both of them strong and stable leadership positions. Competitors that
want to survive will need to choose their niches carefully.
The only users directly impacted by this announcement are those who are planning
to build vertical marketplaces in the next few years - and estimates suggest
that there are about 10,000 of you. Those that are will want to see what Ariba
can promise, particularly in terms of delivery dates and back-end support for
your own customers. If you decide not to go with an Ariba/TRADEX solution, be
well advised to work at faster than net time to get your product up, running
and populated. A company that chooses to move into your market using Ariba's
forthcoming solution will have a powerful offering with which to compete against