Oracle plans online purchasing service

Oracle aims to catch software rivals Ariba and CommerceOne, which already offer a service for office supplies. Separately, chief executive Larry Ellison says Oracle has developed a $150 network computer based on Linux.

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Oracle plans to open an online purchasing service called Oracle Exchange by year's end.

Announced today, the move is designed to help Oracle catch up to start-up rivals Ariba and CommerceOne, which already offer similar services. All three companies compete in the procurement software market.

Separately, Oracle chief executive Larry Ellison today said the company has developed a $150 network computer based on the Linux operating system and an Intel processor. Oracle has no specific plans to build and sell the product; but if it did, the company would spin off a separate company, like it did with Network Computer Incorporated, which makes network computers and set-top boxes.

But the thrust of today's press event was on procurement software. Oracle said Oracle Exchange will launch with more than 260 suppliers of office supplies, books, computers, and temporary staffing.

Electronic procurement automates paper-based processes, reducing costs and streamlining efforts in ordering routine supplies. The increasingly attractive niche has also drawn software makers Trilogy and Spaceworks.

Oracle said it will join Ernst & Young to set up a center at Ernst & Young's Chicago facility, for customers to model how online procurement can would work for their companies.

As for the low-priced, browser-based network computer, Ellison said he had asked his special projects team to create a prototype. It features 64MB of memory and can boot up from a CD-ROM. It would cost $150 without a monitor and $250 with a monitor.

According to an Oracle spokesman, the network computer, or NC, is still in the idea stage and the company has no formal plans to sell it. The idea stems from Oracle's volunteer efforts in equipping schools with computers, the spokesman said. Two years ago, the company announced it would donate $100 million in network computer equipment to public schools.

Inexpensive Linux computers are popping up at several companies. Linux, which by its licensing terms must be available for free, is one way to bypass the licensing fee for Windows--an increasingly large fraction of the computer's cost as the prices on hardware plummet.

Though much work is under way to make Linux better suited to novices, it's still not well suited to the inexperienced, most agree. One advantage of Linux, however, is that it can be customized by anyone, making it possible to shield the user from complexity.

Separately, Commerce One issued its quarterly earnings report, reporting revenues of $4.2 million and a loss of $11.8 million.

News.com's Wylie Wong and Stephen Shankland contributed to this report.