As its Aug. 1 launch date approaches, the High-Tech Internet Exchange, led by Compaq Computer Corp. and Hewlett-Packard Co., has gained four new founding members and closed out its initial funding round.
The group, formally known as eHITEX, raised $100 million in equal contributions from its 15 members, but has reserved 20% of its shares for non-equity users of the exchange to "earn" in a performance-based incentive scheme, said Keith Melbourne, interim chief executive of the Sunnyvale, Calif.-based e-commerce initiative.
"Any member will be able to gain equity as a result of the volume they put through the exchange," he said.
eHITEX, formed to help streamline the IT supply chain and increase supply and demand visibility, will initially focus on PCs. But the group plans to expand its scope to consumer electronics and telecommunications, and to the components common to all three, Melbourne said. New founders Agilent Technologies, Canon, and Tatung will give the exchange closer ties to these markets.
The addition of Synnex Information Technologies brings a distribution component that was missing from the original lineup. Synnex is a franchised reseller of several of the exchange's founding OEMs.
The balance of the founding group includes AMD, Gateway, Hitachi, NEC, Quantum, Samsung Electronics, SCI Systems, Solectron, and Western Digital.
The group boasts a "nonexclusive" membership that will extend to component suppliers, contract manufacturers, OEMs, franchised distributors, and nonfranchised distributors. "We do plan to go deeper into the supply chain, as well as form alliances with other exchanges," Melbourne said.
The group, focused on defining the services it will offer, has a 55-person technology development team in place. Business and legal advisors, including Goldman Sachs, TMP International, PriceWaterhouseCoopers, Hewitt and Pillsbury, and Madison & Sutro, are assisting the group in its preparations for delivering services to customers. Additionally, in line with its commitment to open standards via the RosettaNet consortium, eHITEX has adopted XML as its foundation.
Users will be able to perform component auctions, catalog procurement, and some work-flow management functions. Financial services and contract purchasing capability will be added later, Melbourne said.
After 90 days, services are planned to enable early supply-chain collaboration, supported by what Melbourne described as "significant breakthroughs" in the area of logistics and transportation that will allow members to get better rates and faster availability than through direct service relationships.
Eventually, the exchange will engage in all forms of trading and more sophisticated supply-chain services and design collaboration.
Non-equity members will have access to the same services as founders, whether they want to sell surplus inventory, locate a product, secure price and delivery on a volatile component, use the exchange's logistics capabilities, or take advantage of its financial services.
Forrester Research Inc., Cambridge, Mass., predicts that sales of high-tech components through online exchanges will reach $600 billion over the next few years, and rates the high-tech industry among those "most ready" to adopt electronic trading.