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High-Tech Industry Leaders Announce Open Internet Exchange For Computer And Electronics Marketplace

May 1, 2000 13:21 PM

New York -- AMD, Compaq, Gateway, Hitachi, HP, Infineon, NEC, Quantum, Samsung, SCI Systems, Solectron, Western Digital to form independent company for high-tech supply chain, increasing business efficiency and customer value

Twelve high-tech industry leaders today announced their intent to launch an independent company that will operate an open Internet exchange to serve the needs of the high-tech supply-chain community.

The new venture will provide services to buyers and sellers involved in computing and electronics-related industries. The exchange is expected to enable these businesses to manage their supply chains more efficiently and effectively, improve delivery of products and services to the marketplace, and increase customer satisfaction.

An estimated $600 billion* in online business-to-business sales of high-tech components and parts will occur over the next few years, making this the world's largest e-marketplace opportunity. The founding companies are some of the world's largest buyers and suppliers of computer and electronics components and products and have developed considerable expertise in efficient procurement and sales.

The exchange's end-to-end services will be open and available to all parties in the supply-chain process -- consumer and business electronics makers, contract manufacturers, suppliers, and distributors. All participants in this electronic marketplace will be able to manage a wide array of their e-procurement purchases and sales through this new exchange.

"The creation of such an exchange can improve supply-chain efficiency tremendously through cost reduction, timely transactions, inventory savings, and higher-value services," said Dr. Hau Lee, professor of Operations, Information and Technology, Stanford Business School. "But most importantly, it will enable supply-chain partners to fundamentally redesign their business processes and create new business opportunities from end to end. This is a major step toward a virtual economy for the high-tech industry."

In addition to delivering the traditional benefits of the Web, such as continuous global reach and open industry-standard interfaces, the new high-tech exchange is expected to:

• lower manufacturing and purchasing transaction costs through process efficiencies;

• reduce levels of inventory throughout the entire supply chain by better matching supply and demand via the online marketplace;

• increase customer satisfaction by improving the ability to deliver products more quickly and predictably;

• provide expertise on supply chain "best practices" to help participants achieve better results from product design to customer delivery.

The exchange is expected to begin operations within 90 days. The founders plan to contribute resources and an initial total of $100 million to the new company and will have equal ownership in it. They intend to use the exchange for their own supply-chain activities, driving significant transaction volumes through it.

A full-time interim management team, comprised of representatives from the founders, has been chartered to finalize the formation of the new company and launch the business. More details on the exchange are available at Other companies interested in becoming founders should contact Keith Melbourne of HP, (408) 447-4275, or Wendy Caswell of Compaq, (281) 518-2918, by May 15, 2000.

* Data point from "eMarketplaces Boost B2B Trade," Forrester Research, Inc. Feb. 2000

This press release contains statements that are forward-looking. These statements are based on current expectations as of the date of release.


Companies Comment on New High-Tech Internet Exchange

Rob Herb, Executive Vice President and Chief Sales and Marketing Officer,AMD Michael Capellas, Compaq President and CEO

"AMD is honored to join a number of the world's other premier information technology companies in launching an open exchange that will establish a new frontier in e-commerce. We believe the creation of an independent company focused on employing business-to-business open standards over the Internet for the entire high-tech supply chain will provide efficiencies to help lower costs and improve services that will benefit not only AMD and our customers, but also end-users around the world."

Michael Capellas, Compaq President and CEO

"Compaq is continually driving ways to create greater value for our customers - and the Internet has the power to transform business process and relationships to benefit our customers. This new on-line exchange for technology components allows tremendous savings in the time, resources and money spent in procuring parts by openly integrating different buy side, sell side and service provider environments. The result will be lower transaction costs, lower sales costs, better pricing decisions and increased customer satisfaction."

Jeff Weitzen, Gateway President and CEO

"This new, more efficient way to purchase goods and services should allow Gateway to enhance its ability to deliver customers the highest quality products as soon as they are available and at an even better overall value. At Gateway, we have said for some time that the Internet will change the way we live, learn, work and play. Creating this type of electronic marketplace is a perfect use of the Web."

Tomoharu Shimayama, Hitachi America, Ltd., President and CEO

"Speaking on behalf of Hitachi, Ltd. and the Hitachi Group Companies, we are pleased to be a founding member of this new undertaking. The strategies upon which the new company will be based are appropriate for the new economy and consistent with Hitachi's own "Hitachi Plan" to be a "best solutions partner" to our customers in the 21st century. The potential benefits of the exchange approach are significant for our companies and our customers, particularly as we drive our organization to a more Internet-centric business model."

Carly Fiorina, HP President and CEO

"Through this dynamic, open exchange, high-tech buyers and suppliers gain access to an inclusive marketplace that offers fundamentally new ways to master the complexity of our supply chains. We're creating efficiencies and reducing transaction costs for all industry players, which ultimately benefits the people who buy our products. HP looks forward to sharing our expertise in this area for the benefit of all who participate in the high-tech supply chain process."

"Through this dynamic, open exchange, high-tech buyers and suppliers gain access to an inclusive marketplace that offers fundamentally new ways to master the complexity of our supply chains. We're creating efficiencies and reducing transaction costs for all industry players, which ultimately benefits the people who buy our products. HP looks forward to sharing our expertise in this area for the benefit of all who participate in the high-tech supply chain process."

"Infineon is not only committed to innovation in design and manufacturing, but also in the supply and distribution processes. It is a necessary step to advance the innovation on the high-technology supply chain an order of magnitude by involving the key industry players in an Internet-based procurement initiative that is directly managed by those involved and open to all. Ultimately, saving our customers both time and money are the end result of an initiative like this, which will help companies succeed in the fast-moving high-technology marketplace."

"We are excited to be participating in this opportunity to engage in new ways of transacting business with our customers. We believe these new avenues greatly expand our efficiency and effectiveness with our customers. The new venture is consistent with Quantum's strategy to leverage the proliferation of the Internet and to meet the burgeoning need for content management and storage."

Jong-Yong Yun, Samsung Electronics Corp. Vice Chairman and CEO

"Our extensive experience as both a buyer and seller of goods in this market space suggests that there is a fair degree of inefficiency in the current high-tech supply chain. We stand ready to initiate improvements in the industry, beginning with our sponsorship of this exchange. The exchange is designed to be an open, public marketplace, and we invite all players in our industry to join."

Gene Sapp, SCI Systems, Inc. CEO

"We're continually seeking innovative ways of becoming more directly connected with our customers. Our commitment and focus is to become the electronic manufacturing services e-business leader. The new exchange will provide us with the capability to conduct e-business at the next level, and to do so in a manner whereby all of our customers benefit. We are delighted to participate in the development and use of the exchange."

Matt Massengill, Western Digital President and CEO

"The open nature of this high-tech exchange creates immediate and long-term operational efficiencies for buyers and sellers. Western Digital has an intuitive understanding of the value this dynamic marketplace can provide computing industry participants, based on our long-standing strategic relationships with both suppliers and customers. We plan to contribute our expertise in asset, inventory, and supply-chain management, helping optimize distribution and procurement systems for participants."

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