Pandesic

Pandesic was an Intel-SAP joint venture founded in late 1997. In July 2000 it was finally closed after burning through an estimated $200,000,000 of investment from its founders.

Harold Huges and Pete Wolcott, both former Intel executives, were in charge of the operation for the duration.

As one of the first ASP's to hit the market, Pandesic was a pioneer taking the arrows in its back. Hindered by having its core technology (SAP R/3) owned and controlled by SAP, Pandesic could not consider certain market segments without the permission of its founders. For this reason it didn't enter the B2B market, thereby allowing Commerce One to succeed.

Pandesic's architecture also hindered its growth. It required a single instance of SAP for every merchant deployed. This unscalable system disabled any ability to get economies of scale, and disabled any self-configuration as executed later by Yahoo.

Pandesic's business model was also a hindrance to its success. Besides setup costs of around $25K, it extracted a 6% fee from revenue - thereby attracting companies that could not afford to outright purchase their ecommerce system, or didn't believe enough in their business model to avoid this perpetual tax. In effect, Pandesic attracted lemons. Furthermore, cost estimates of the deployed system ran into the low $100K, requiring the customer to generate over $80K in revenue for Pandesic (~$1.3M in total revenue) before the company broke even.