Rumors are circulating that B2B firm Ariba may be taken over.
B2B systems firm Ariba hasn’t been doing very well. It made an operating loss of $48.3 million for the last quarter – and its loss after special charges was $1.84 billion. It has abandoned its plans to expand into manufacturing and design collaborations, instead returning to its core business of procurement software.
Perhaps it’s no surprise, then, that many expect the firm to be taken over. Analysis firm AMR Research has said on the silicon.com website that IBM, Manugistics and Siebel are all potential buyers. IBM looks like the most likely candidate; Manugistics and Siebel have both denied their interest, claiming that Ariba wouldn’t fit in with their core businesses. IBM, on the other hand, is large enough that Ariba could be integrated more easily. It also already has a large stake in the B2B firm.
But does Ariba need a merger partner? Beyond the general downturn in sentiment towards the B2B sector, it will soon face a more serious challenge. Last week, Microsoft and VerticalNet agreed jointly to develop ‘supplier enablement tools’ – in other words, B2B systems.
VerticalNet already has over 20,000 suppliers signed up for its vertical portals. If it can persuade them to move to its software systems as well, it will rapidly acquire a large share of the market, currently dominated by Ariba and Commerce One. And Microsoft’s backing can only help. Its .NET platform is certain to be a major new standard thanks to its market power, and the firm can provide VerticalNet with a great deal of technical help.
Times are already hard for Ariba – and they’re likely to get worse before things get better. But the firm has potential as one of the largest players in a market which, dotcom doom aside, is still large, important and growing. It certainly wouldn’t be a surprise if IBM decided to go from shareholder to owner, providing the funds and support Ariba needs to maintain its position and reach profitability.
