The Net Market of the August Moon
Written By: D. Geller
Published On: August 2 2000
The Net Market of the August Moon
Whether you think of it as 10,800,000,000,000 (10.8 quadrillion yen)
or as merely $100 billion, the B2B opportunities in Japan are tremendous.
Calico Commerce intends to be a major power behind that flow of currency
by providing tools to build net marketplaces, and has announced the opening
of Calico Japan K.K., a wholly owned subsidiary. Calico Japan will sell
localized versions of Calico Market Maker and Calico Advisor. Yoshiyuki
Tanaka, who previously launched and served as Managing Director for TIBCO's
Japanese office, will pilot the new company.
Market Maker is an application for building a net market, including relationship
management, catalog, and transaction processing features. It is built
from a base that Calico acquired when it purchased connectinc.com(See
to Sport Calico Label"). Calico Advisor exhibits one of Calico's
core strengths - the configuration and sale of complex products. Advisor
assists in the selection of assemble-to-order and pick-to-order products.
Calico also has a similar product for configuring engineer-to-order products,
as well as tools for enabling business-to-consumer e-commerce, but these
are not part of the initial product offerings for Calico Japan. Both products
are Java-based, although Calico's original product was a Microsoft solution.
has vertical specializations in telecommunications, retail and high-tech
and industrial manufacturing. The company has also seen a recent increase
in interest on the part of dot-com customers.
Calico is getting off to a relatively early start in Japan. US Bancorp
Piper Jaffray recently observed that the major B2B firms have been slow
to penetrate the Japanese (and other international) markets. Commerce
One has been the leader in building e-commerce relationships (see "Commerce
One: Everything but Profits"); this paid off recently with the
announcement of its MRO marketplace built and operated jointly with NTT
January, 2000 VerticalNet and Softbank Commerce Corp., a wholly owned
subsidiary of Softbank Corporation (Tokyo Stock Exchange 9984), announced
creation of a company to replicate VerticalNet's strategy of building
and operating vertical marketplaces that are augmented by content and
Calico's model is different from each of these. Calico does not in general
host or participate in the markets that its software is used to build.
This gives it a potentially much wider market, and it makes its money
up front instead of depending on transaction fees that have so far been
somewhat elusive for other companies. Flush with capital from its October
1999 IPO the company is well positioned to make a significant impact in
Japan, and its specialization in procurement of complex products and assemblies
is likely to be especially appreciated there.
Japanese businesses interested in becoming Net market makers will definitely
appreciate the appearance of a powerful product in their market. North
American and other companies will be interested in this development for
those that have interest in extending their operations to Japan or working
with Japanese partners will see possible advantages to using Calico
software as a base.
the experience that Calico gains by developing its Japanese company
will be invaluable as it continues to expand internationally.
Calico needs to build up its customer base. In the last fiscal year,
ending in March, ten customers accounted for 61% of its revenue - and
half of that derived from only two customers.
the company derives just over 50% of revenues from services. Neither of
these metrics from last year is necessarily an indication of future performance,
but an expansion into Japan should help improve both. The result would
be to enhance the company's stability.
obvious danger that rapid growth might strain the company's resources,
but while that's something potential customers should always be concerned
about, the upside to this situation is that should this happen to the
Japanese company it won't be likely to have much of an impact in North
America. On the other hand, effort that the company puts into building
training programs for alliance partners and developers will be of benefit
on both sides of the Pacific.