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The week in review: Baan bows to the inevitable

One-time powerhouse Baan agrees to a startlingly low takeover that underlines changing trends in the high-tech industry.

One-time powerhouse Baan agreed to a startlingly low takeover offer that underlines how times have changed in the high-tech industry.

British automation equipment maker Invensys will pay $708 million for Baan, a Dutch company whose market capitalization had slipped to some $500 million from $8 billion amid seven straight loss-making quarters. Much of the decline owes to market migration from enterprise resource planning (ERP) software to Web-enabled customer relationship management (CRM) products.

All aboard?
Late to recognize the Internet-driven change--essentially from "back-end" applications such as manufacturing, human resources or finances to "front-end" sales, marketing and call-center needs--Baan in March announced plans to launch a CRM subsidiary. The move failed to shore up slumping revenues, which fell to $106 million in the most-recent quarter from $176 million a year ago.

Baan also struggled with the January loss of its chief executive officer--seven months into the job--and chief financial officer, but the industry's turn to CRM and other Web-based software has been profound. The CRM market is expected to reach $11 billion in 2003 from $1.9 billion in 1998, while business-to-business products and application service providers (ASPs), companies that rent business software, also have been among the year's hottest sectors.

As if to further emphasize high-tech's shifting favor, also this week telecommunications equipment maker Lucent Technologies bought fiber-optical networking company Chromatis Networks for $4.5 billion, more than six times the price of Baan. Privately held Chromatis makes equipment that speeds the delivery of data, voice, and video across networks, seen by many as e-commerce's most important building block.

Playing catchup
Hewlett-Packard struck an multifaceted agreement to supply the servers powering Amazon.com's Web site and also become an "anchor tenant" in the e-commerce giant's consumer electronics business. The contract is important for HP, which missed the Internet?s first boom and has since been trying to catch Sun Microsystems.

Gateway and America Online tapped upstart chipmaker Transmeta to provide processors and software for an upcoming line of Internet appliances, a month after joining Compaq Computer and others in providing Transmeta with $88 million in funding. Also last month, the duo unveiled a line of jointly developed Internet appliances running Linux. The choice of Transmeta, which will provide Crusoe chips and its Mobile Linux software for the devices, is another slap at chip giant Intel.

A high-performance version of Advanced Micro Device's Athlon processor dubbed Thunderbird will make its debut next week, marking a number of firsts as well as the formal opening of AMD's fabrication facility in Dresden, Germany. The copper chip will run at speeds from 750 MHz to 1 GHz and higher and cost less to manufacture because of its integrated cache memory.

New and improved?
AOL is testing a high-speed version of its online service via satellite. The forthcoming product is the first incarnation of the online giant's $1.5 billion investment in General Motors' Hughes Electronics.

A loose group of open-source programmers responsible for the controversial Gnutella file-swapping software has turned the technology into a search engine. The adaptation of the same technology now used to swap MP3 music files between hundreds of thousands of computer users may present a challenge to Yahoo and Lycos.

Oracle licensed the server version of Sun's Java software, leaving IBM as the only major holdout that hasn't agreed to Sun's terms. Ironically, Big Blue is a major Java backer. Other licensees have objected to royalty fees and voiced concerns about software's adoption schedules.

Also of note
The federal judge overseeing the Microsoft antitrust trial delayed an expected ruling ? A start-up instant messaging firm released software it claims will tear down the barrier between America Online's popular AIM and ICQ ... Linus Torvalds posted a test version of the next version of the Linux kernel, but said it is a prototype ... Intel slashed prices for its desktop and mobile processors, although many of the discounted chips remain in short supply ... U.S. regulators adopted a sweeping phone industry proposal to revamp a national subsidy system, cutting $3.2 billion in long-distance charges this year.