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Cisco takes stake in AutoXchange

The networking giant takes an equity stake in AutoXchange, an online business Ford Motor and Oracle founded to link the automaker's suppliers.

Cisco Systems today said it is taking an equity stake in AutoXchange, an online business Ford Motor and Oracle founded to link the automaker's many suppliers.

Cisco said it will provide AutoXchange suppliers and dealers with networking technology "kits" to help them get online and access the new exchange. Ford executives said the company has about 30,000 global suppliers and 6,900 dealers in the United States. No global figure was given for dealers.

The amount of the equity stake Cisco has taken in AutoXchange was not disclosed. Ford owns an estimated 65 percent of the joint venture, with Oracle holding the rest.

AutoXchange, which Ford plans to use to buy and sell about $80 billion of goods and services annually, is intended to make it easier and cheaper for Ford to obtain parts and services required to build autos.

Over the past week, the company performed its first reverse auction on the site--an auction initiated by Ford--which raised over $78 million dollars. In a reverse auction, a buyer requests a product or service, and suppliers "bid" for that customer's business. Ford did not provide any details about the products or services it requested from suppliers.

Cisco's backing adds to Ford's arsenal in their battle against competing exchanges. For example, Commerce One and General Motors in November launched GM TradeXchange, an e-commerce portal that the automaker plans to use to shift $87 billion in purchases it makes each year to the Web.

Online procurement--buying goods and services on the Web--remains comparatively small in scale. Most big industry suppliers rely on proprietary systems that smaller companies often don't use because of the cost. Web-based networks promise to level the playing field, but it's not clear that online systems are yet up to the task.

"We are well ahead of the game in this space," said Larry Ellison, chief executive of Oracle. "What Intel was to the first generation of computing, Cisco is to the second generation of computing which is the Internet. This is the ideal partner for Oracle."

The companies did not provide details of when the Cisco networking technology will be shipped to Ford's suppliers.

Lane said the partnerships and model established with AutoXchange will be replicated by Oracle for exchanges in other industries. He didn't say what those industries would be.