QuestLink, NetBuy link up for electronics e-commerce

QuestLink, NetBuy link up for electronics e-commerce
SAN JOSE, Calif. — QuestLink Technology Inc., an engineering information Web site, has acquired NetBuy (Laguna Hills, Calif.), an electronics e-commerce site, in an all-stock transaction to create a consolidated e-commerce source for electronic components.

The move gives QuestLink e-commerce transaction capabilities, and process handling software, and strengthens its position against major e-commerce competitor PartMiner Inc.

The purchase makes QuestLink an e-commerce entity with 76 employees, a database of 2,500 manufacturers and a monthly revenue stream approaching $300,000.

NetBuy's transactional infrastructure, application software and access to 62 distributors and $2.3 billion inventory of over 330,000 electronic components, equipment, software and manufacturing-related items and services will enable QuestLink to make the transition from an information resource for engineers to a one-stop electronic component information and e-commerce shop.

QuestLink's Web site boasts 25-to-30 million pages of data, a database of 600,000 part numbers, 100,000 registered users worldwide and 200,000 site visitors every month, but most of its revenue comes from advertisements.

Mike Shultz, president and chief executive officer of QuestLink, said he intends to drive e-commerce to comprise the bulk of company sales by 2001, and the NetBuy purchase is one way to do that.

The acquisition provides QuestLink with necessary e-commerce capabilities that would have taken the company nine months or more to develop on its own, Shultz said.

A key to QuestLink's e-commerce success will be the NetBuy software that allows engineers to upload an entire bill of materials for a design, as well as a quote for those materials, then purchase the components with a single click. NetBuy's e-commerce know-how is the key to the deal. NetBuy was created in 1997 by William Jastrow, a former purchasing agent at Amdahl Corp.

NetBuy was ahead of the market in developing a sophisticated e-commerce site and in creating a brand for itself, said market research analyst Kevin Jones of Net Market Makers (Berkeley, Calif.).

But NetBuy's branding was a challenge to electronic component distributors, which traditionally brand their own products, and NetBuy's branding strategy may have been the company's undoing, Jones said. NetBuy had difficulty getting significant venture capital financing, and the merger seemed the best solution, he said.

James Wittry, chief executive officer of NetBuy, declined comment on the reason for the merger, and referred all questions to QuestLink's Shultz.

Over the next 60 days, QuestLink plans to combine the two Web sites into one that will be known as QuestLink. The site will feature information services, buying services and news feeds. Until a single merged site is created, there will be links between the two separate sites.

QuestLink said it plans to evaluate NetBuy alliances with distributors and suppliers. QuestLink already has relationships with Avnet, Agilent Technologies, All American, Misumi of Japan, and Nu Horizons.

QuestLink plans to retain all NetBuy management and will rename the NetBuy operations as QuestLink Irvine.

By the beginning of next year, Shultz said QuestLink will bring more utility and enabling technology to engineers. He said he's talking with EDA vendors to develop symbol libraries and footprint libraries as well as simulation models for the site.

Last month QuestLink inked a deal with Viewlogic Systems that gives users of Viewlogic's ViewDraw access to component information from QuestLink's Web site during the schematic design process.

In addition, QuestLink plans to open up its information and e-commerce offerings to more engineers outside the United States by the first quarter of 2000. The company plans to roll out foreign-language front ends for its site in Korean, Japanese, Chinese, French and German, and to add transaction capabilities for other currencies and countries.

Analyst Jones said the deal validates the electronic components e-commerce space and creates two main players in that market — QuestLink, and PartMiner (New York).

PartMiner was started in 1998 by Dan Nissanoff, chief executive officer of Microcom Technologies, who originally designed it as an internal tool to assist his purchasers by searching inventory on the Internet.

Though the two often claim not to be competitors and to have different business models (PartMiner focuses on the anonymous exchange of components on the spot market), Jones sees the two as "channel-friendly players that have the money and the momentum" to succeed.

Both have support from heavy hitters. QuestLink's investors include distributors Avnet and Arrow, which have invested more than $20 million in the company. (That's more than the two have invested in ChipCenter, their own e-commerce site, according to Net Market Maker's Jones.) PartMiner's backers include Boston Ventures Management Inc., a venture capital firm, as well as Information Handling Services Group and SeaCoast Capital. Distributors Arrow and Avnet hold equity stakes in ChipCenter, as do electronic components software publisher Aspect Development, and CMP Media, which publishes EE Times.

There are other smaller e-commerce entities, including Tradec.com Inc. (San Jose, Calif.), whose e-Services is said to enable companies to automate, accelerate and optimize the procurement process, and FastParts.com (San Jose) a business-to-business, Internet-based trading exchange and marketplace for the electronics manufacturing and assembly industry.

But these sites may not be independent for long. "I expect further consolidation in the electronics e-commerce space because there's too much noise in the space and because this [kind of e-commerce] works better when there's a single source," said Jones.