Vendor Genesis:
Commerce One began life in 1994 as DistriVision, originally focused on developing CD-ROM sales catalogs. The company took its first steps toward fame and fortune at age two-and-a-half when it grabbed Mark Hoffman, who had been CEO of Sybase, to be its leader. As new CEO, Hoffman quickly raised more than $7 million in venture funding for the infant company, and brought several former Sybase employees along with him. Hoffman said at the time that he supposed the company could reach $100 million within five years.
A few months later the company had a new name and a new product release to go with it. In April 1997 Commerce One released products for building online catalogs, for shopping and for transaction processing. Following upon this release the company entered into its first significant relationship, a partnership with MCI. Under the terms of the partnership MCI provided network infrastructure and 24/7 operations for Commerce One to build its marketplaces. MCI Systemshouse and Ernst&Young Technologies were signed to provide consulting services to suppliers. MCI also became one of Commerce One's flagship customers.
In 1998 Commerce One teamed with Microsoft, PriceWaterhouseCoopers and SAP to offer purchasing services in Europe. Microsoft's presence was due to Commerce One's strategy of basing its products on standard Microsoft software. SAP was to provide ERP software. Also in 1998 the company made a fundamental commitment to XML by purchasing Veo, Inc. Veo specialized in developing XML based products for trading networks. Veo had been spun off from CommerceNet, where it was instrumental in developing CommerceNet's proposed standards.
By March of 1999 Commerce One had released a fully functional online product suite based on XML as a connector that would enable other companies to link with its software. With this software Commerce One's customers could go through Commerce One's marketplace, called MarketSite, to reach such vendors as Office Depot and Grainger. An XML tool, called the XML Commerce Connector, allowed buying companies to link from their own internally maintained catalogs into MarketSite, and also linked MarketSite to supplier catalogs. Overall, Commerce One's position regarding business languages in general and XML in particular has been to support open connectivity.
The same year, 1999, was Commerce One's IPO, which brought the company $69 million. However, soon afterward Commerce One suffered a setback when, as a result of its merger with WorldCom, an Ariba customer, MCI switched to the Ariba Network. But the loss was not fatal (although. Ariba's PR people made the most of it). By the end of the year Commerce One's stock price had shot up twenty fold, giving it a market capitalization of $20 billion, and it had partnerships with companies like British Telcom, Nippon Telegraph and Telephone, PeopleSoft and such financial institutions as Toronto-Dominion Bank of Canada and Banacci of Mexico. It had signed to develop General Motors' GM Marketsite, and had purchased CommerceBid to gain the technology to add auction capabilities to its product line.
Toddling into the year 2000 Commerce One has been moving strongly, especially in the international part of the world. It has developed regional trading hubs in China and South Africa to add to its others in Japan, Australia and Southeast Asia, Europe and North America.
Figure 1 shows the company's revenue history. Through Q3 of 1999 license revenues were growing faster than exponentially and service revenues were growing slower than linearly. This was an excellent position to be in. (Growth in revenues has been so amazing that were it to continue at those rates it would exceed $5 trillion within two years. So, of course a slowdown was to be expected, and must be seen as healthy. Growth in Q4 seems to have slowed in geometric terms, but this should not be of much concern, especially given the dramatic upturn in Q1 of 2000.)
However, licensing is not where the company expects to make its money. Much of its revenue is expected to be in the form of transaction fees for the purchases made on the various networks it manages or has revenue partnerships with. The company also expects to garner revenues from commissions on auctions and from subscriptions to hosted services. There are also revenue sharing agreements with at least 75 portal partners and the company is developing other services.
Overall, to date the only significant revenues have been from license fees. This is in line with all reasonable expectations, but we'd look to see those revenues begin to flow by Q3 of 2000, and Commerce One agrees that the next year or two will be critical in proving their financial viability.
SOURCE:
http://www.technologyevaluation.com/research/articles/commerce-one-everything-but-profits-15796/
Commerce One began life in 1994 as DistriVision, originally focused on developing CD-ROM sales catalogs. The company took its first steps toward fame and fortune at age two-and-a-half when it grabbed Mark Hoffman, who had been CEO of Sybase, to be its leader. As new CEO, Hoffman quickly raised more than $7 million in venture funding for the infant company, and brought several former Sybase employees along with him. Hoffman said at the time that he supposed the company could reach $100 million within five years.
A few months later the company had a new name and a new product release to go with it. In April 1997 Commerce One released products for building online catalogs, for shopping and for transaction processing. Following upon this release the company entered into its first significant relationship, a partnership with MCI. Under the terms of the partnership MCI provided network infrastructure and 24/7 operations for Commerce One to build its marketplaces. MCI Systemshouse and Ernst&Young Technologies were signed to provide consulting services to suppliers. MCI also became one of Commerce One's flagship customers.
In 1998 Commerce One teamed with Microsoft, PriceWaterhouseCoopers and SAP to offer purchasing services in Europe. Microsoft's presence was due to Commerce One's strategy of basing its products on standard Microsoft software. SAP was to provide ERP software. Also in 1998 the company made a fundamental commitment to XML by purchasing Veo, Inc. Veo specialized in developing XML based products for trading networks. Veo had been spun off from CommerceNet, where it was instrumental in developing CommerceNet's proposed standards.
By March of 1999 Commerce One had released a fully functional online product suite based on XML as a connector that would enable other companies to link with its software. With this software Commerce One's customers could go through Commerce One's marketplace, called MarketSite, to reach such vendors as Office Depot and Grainger. An XML tool, called the XML Commerce Connector, allowed buying companies to link from their own internally maintained catalogs into MarketSite, and also linked MarketSite to supplier catalogs. Overall, Commerce One's position regarding business languages in general and XML in particular has been to support open connectivity.
The same year, 1999, was Commerce One's IPO, which brought the company $69 million. However, soon afterward Commerce One suffered a setback when, as a result of its merger with WorldCom, an Ariba customer, MCI switched to the Ariba Network. But the loss was not fatal (although. Ariba's PR people made the most of it). By the end of the year Commerce One's stock price had shot up twenty fold, giving it a market capitalization of $20 billion, and it had partnerships with companies like British Telcom, Nippon Telegraph and Telephone, PeopleSoft and such financial institutions as Toronto-Dominion Bank of Canada and Banacci of Mexico. It had signed to develop General Motors' GM Marketsite, and had purchased CommerceBid to gain the technology to add auction capabilities to its product line.
Toddling into the year 2000 Commerce One has been moving strongly, especially in the international part of the world. It has developed regional trading hubs in China and South Africa to add to its others in Japan, Australia and Southeast Asia, Europe and North America.
Figure 1 shows the company's revenue history. Through Q3 of 1999 license revenues were growing faster than exponentially and service revenues were growing slower than linearly. This was an excellent position to be in. (Growth in revenues has been so amazing that were it to continue at those rates it would exceed $5 trillion within two years. So, of course a slowdown was to be expected, and must be seen as healthy. Growth in Q4 seems to have slowed in geometric terms, but this should not be of much concern, especially given the dramatic upturn in Q1 of 2000.)
However, licensing is not where the company expects to make its money. Much of its revenue is expected to be in the form of transaction fees for the purchases made on the various networks it manages or has revenue partnerships with. The company also expects to garner revenues from commissions on auctions and from subscriptions to hosted services. There are also revenue sharing agreements with at least 75 portal partners and the company is developing other services.
Overall, to date the only significant revenues have been from license fees. This is in line with all reasonable expectations, but we'd look to see those revenues begin to flow by Q3 of 2000, and Commerce One agrees that the next year or two will be critical in proving their financial viability.
SOURCE:
http://www.technologyevaluation.com/research/articles/commerce-one-everything-but-profits-15796/
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