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E-marketplaces: Where are they now?

Gary Flood ZDNet.co.uk

Published: 16 Dec 2003 13:20 GMT

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Remember e-marketplaces -- those huge virtual trading rooms that were going to both replace and automate the process where companies and suppliers met and traded?

How time has flown these past three years. For the phrase "e-marketplace" is now so old-fashioned that using it'd be like still calling people "hip cats" -- or asking if someone can "dig" what you’re saying.

That may sound a bit harsh to the small but stalwart minority of companies that still follow the trend. And, boy, was it a trend for a while. Remember when (October 2000 to be precise) Gartner Group foresaw e-marketplaces would be a $2tn industry by 2005? To prove even the smartest people can sometimes get it badly wrong, fellow egg-heads IDC were still forecasting them doing $2.8bn worth of business by 2005 -- despite them doing a mere $800,000 worth of business between them all in the year of that prediction, 2001.

Turns out that $800,000 number wasn't, alas, that far off the mark for at least one metric of e-marketplace activity. For one-time e-marketplace poster boy and market leader, Commerce One, recorded just a little over that, $900,000, for licence sales of all its software in the third quarter just ended.

What went wrong?
That somewhat anaemic figure compares pretty poorly with the $8.5m worth of licences the luckless firm sold in the same three months of 2002. This is from an outfit, remember, that saw its market valuation hit $21.5bn in March 2000.

What went wrong here? First off, let's make clear that there are still e-marketplaces, that some are doing fine, and that there are transactions going on in them. Market watchers AMR Research estimated earlier this year that e-marketplace software sales should expand 12 percent by 2004, to $946m, set to grow (it says) to a healthy $2.5bn.

Still, not quite $2tn, is it? What's confusing about throwing such big numbers around is that it can lose the underlying point: e-marketplace (release 1.0) hasn't been a big winner. But as with many things digital, the second release may be much more worthy of your attention.

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