FOR $25,000, PANDESIC CAN PUT A STARTUP ON THE NET IN SIX WEEKS (int'l edition)
When Intel Corp.'s microprocessor orders surged last year, the chip giant groaned. The problem: These weren't big-ticket orders but lots of little ones from tiny clonemakers--in India, China, and elsewhere. Intel's customer base shot from 1,000 companies to 50,000, taxing its support operations. The solution, figured Harold E. Hughes Jr., Intel's director of planning and logistics, was to use the Internet. ''We needed a Web connection to take orders,'' he says.
Then an even bigger idea emerged. Intel was a customer of SAP, which was releasing a Net-ready version of its R/3 software for running back-office operations. Why not bundle SAP's software with Intel-based PC servers and sell the combo to companies that wanted to do business on the Web? Hughes broached the idea with SAP co-chairman Hasso Plattner, and on Aug. 5, they launched Pandesic, a 50-50 joint venture, of which Hughes is chairman.
STANDOUT. Pandesic's offer: For $25,000, small and midsize firms get everything they need to put their businesses on the Net in six weeks--from computer hardware to software programs that handle finance, shipping, and inventory. One reason Pandesic's product, which shipped on Sept. 30, is a standout in the crowded E-commerce market is its unusual twist on pricing. To keep it affordable, Pandesic charges a small up-front price but takes a fee of 1% to 6% of a customer's monthly sales. In exchange, the online merchant gets installation, training, upgrades, and maintenance. The transaction fee is a low-risk way for small fry to foot the expense of setting up and maintaining their online stores.
Take Thin Blue Line Inc. The Canadian mountain-bike maker aims to use Pandesic's product to storm the U.S. market. ''It's the lowest-risk method of marketing I've seen,'' says Dan Rivers, vice-president at Thin Blue Line. He figures the Net could double his company's $4 million in sales--with the help of Pandesic. The system, he says, ''solves all the problems of dealing with customers and shipments.'' That includes checking availability, tracking orders--even handling cross-border taxes.
Will Pandesic ever grow as big as its parents? Maybe not. But the Sunnyvale (Calif.) outfit dreams of being a multibillion-dollar baby. For a start, it aims to go from five customers today to 60 by yearend. Internet sales are expected to soar to $26 billion by 2001, according to International Data Corp. If Pandesic gets a sliver of that, Intel will be glad of the problems it had last year.
By Gail Edmondson in Paris, with Andy Reinhardt in San Mateo, Calif.
Updated Oct. 23, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.