SAP Calls Off Licensing Deal With Commerce One

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SAP AG has called off a licensing agreement to jointly sell software with U.S partner Commerce One Inc., Gary Fromer, the chief strategist of SAP Markets, told Reuters in an interview.

The move reflects the increasing separation of SAP, Europe's biggest software maker, from Commerce One and comes hot on the heels of comments by SAP executives in Europe on Tuesday that Commerce One should seek business independently from the partnership.

The news sent Commerce One's stock tumbling 17.92 percent, or 68 cents, to $3.19 on the Nasdaq on Wednesday, where the stock was one of the biggest percentage losers. Shares of SAP were down 2.62 percent on the New York Stock Exchange.

SAP and Commerce One, a Pleasanton, California-based provider of software, got together in 2000 to form an alliance to go after the then-booming market for electronic business-to-business marketplaces and online procurement.

As part of the deal Commerce One and SAP, which owns a 20 percent stake of Commerce One, combined their online marketplace efforts into a single offering called MarketSet and said they would jointly sell each other's online procurement software.

But that joint selling agreement has now been called off, said Fromer, chief strategist of the SAP division set up to target B2B marketplaces.

"We are going to discontinue the joint brand Enterprise Buyer," Fromer said, referring to the joint online procurement software that SAP and Commerce One both had the rights to sell.

Enterprise Buyer was a combination of SAP's high-end professional purchasing software-- Enterprise Buyer Professional--and Commerce One's scaled-down desktop procurement offering, Enterprise Buyer Desktop.

"What's happening is ... the Professional edition is continuing to be developed, sold and maintained by SAP Markets and the Enterprise Buyer Desktop edition will be developed, sold and maintained by Commerce One," Fromer said, adding that SAP and Commerce One will no longer have the rights to resell each other's software.

The joint B2B marketplace product, MarketSet, will continue to be sold by both companies, Fromer said.

Fromer said the decision to call off the joint licensing agreement resulted from a conflict of interest between SAP and Commerce One's sales forces.

"I had very intense discussions with Commerce One ... and what we discovered was that both SAP and Commerce One sales forces went after the same customer base," Fromer said, noting that those customers were mostly SAP's existing business software customers in the manufacturing sector.

"What we decided together was that we allowed our focus to narrow too dramatically."

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