The spinoff of Automotive Network eXchange, the auto industry's members-only Internet, to a private company should make it easier for the network to handle the rising demands of industrial-strength electronic commerce.
Simply put, automakers and suppliers need a bulletproof ANX. They believe important business can't be trusted to the World Wide Web, where Furbys, flowers and dog food are bought and sold.
'The public Internet does not cut it for business-to-business e-commerce,' said Doug Buchanan, business technology manager for Dofasco Inc., a steel mill in Hamilton, Ontario, that supplies the auto industry.
Last week, the Automotive Industry Action Group said it sold its network to Science Applications International Corp. Terms weren't disclosed. Science Applications of San Diego is the parent company of Telcordia Technologies, which has been managing ANX for auto industry members.
An upscale internet
ANX works like the Internet. But it is walled off from outsiders with security features and provides guaranteed delivery of data. The service formally began in September 1998. There are 290 subscribers, and another 150 companies have applied for the service.
A dial-up ANX service - at $150 to $200 a month - is being introduced this month. One of the goals is to expand the service to smaller companies.
Under the auspices of General Motors, Ford Motor Co. and what is now DaimlerChrysler, ANX was designed as a private data network that would allow automakers and large parts suppliers to swap engineering drawings and product specifications. Toyota Motor Corp. is evaluating ANX and likely will join.
The Internet can connect everyone in a multidirectional web, so it was viewed as an ideal system to replace the expensive, point-to-point data links the auto industry has used traditionally.
Development of ANX was a pioneering effort that anticipated the use of the Internet for commercial purposes. But the Automotive Industry Action Group, a nonprofit trade association based in Southfield, Mich., isn't equipped to push ANX to new service levels and keep pace with the burgeoning world of business-to-business electronic commerce, Buchanan said.
He said he was pleased to see ANX spun off to Science Applications International. The company had $4.7 billion in revenues last year. It is a strong player in the fields of electronic commerce and supply chain management.
Buchanan said ANX has 'enormous potential' to position itself as a type of Internet utility company for the new online procurement systems under development at Ford, GM and other big companies. Last month, Ford and GM announced partnerships with software companies to create Internet-based marketplaces where parts and supplies would be bought and sold.
The sale of ANX should speed the introduction of new services such as videoconferencing, Internet-based telephone service and Web-based software that could be used by subscribers, Science Applications International said.
The Automotive Industry Action Group will continue to focus on setting standards for ANX service and working with groups in Europe and Asia that may build similar business-to-business networks. The trade group and ANX's new owners may rename the service so it is not identified so closely with the auto industry. A number of other industries, including plastics, steel and home appliances, could become members of ANX or something like it.
Gary Quick, a Ford purchasing executive on loan to the Automotive Industry Action Group, said ANX needs to expand its subscriber base beyond the auto industry. That will take a big marketing push that a company such as Science Applications International is equipped to provide.
Said Quick: 'Our issue was that we saw a great deal of opportunity, but we also needed a great amount of resources to make it happen.'