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Commerce One has gone through one of the most prolonged and painful deaths of any IT company. From its heady dot-com heyday to its filing for Chapter 11 bankruptcy protection, the business-to-business software company enjoyed an eventful and frequently controversial existence.

At its peak, Commerce One was worth $20 billion on Wall Street. Some analysts even predicted it would become one of the biggest software companies on the planet. Driving that would be the trillions of dollars that would be spent over ecommerce networks. With Commerce One positioned to take a small slice of each transaction, it was seemingly positioned for greatness.

But by October 2004, the company's board had declared Commerce One insolvent and that its once-prized technology should be sold off to the highest bidder. "Not exactly the storybook ending expected during the halcyon days of the late 1990s," says Bruce Richardson, an analyst at AMR Research.

However, it was not just fate that killed Commerce One. The company repeatedly failed to react quickly enough to the downturn in spending in the early part of this decade, keeping its numbers high while competitors were busily issuing pink slips. And its management board made several other blunders that contributed to its death by a thousand cuts. For example, the company owned some of the most expensive office space in the world, hanging on to its Silicon Valley buildings well after the market had turned.

Also high on the list of missteps was the $1.4 billion acquisition of Internet services company AppNet in 2000. Commerce One's CEO, Mark Hoffman, has subsequently acknowledged that the purchase did not work out, but he blames market conditions rather than acquisition execution. But back in 2000 the AppNet deal raised eyebrows: not just because Commerce One was paying well above the market value but because the purchase pitched the company directly against some of its services partners.

In many ways, the relationship established with enterprise application giant SAP foreshadowed Commerce One's eventual demise. Back in 2000, SAP sunk $250 million into Commerce One and increased that by another $200 million in 2001. It appeared that the brash newcomer of electronic marketplaces and the powerhouse of enterprise resource planning were preparing to divide up the ecommerce world between themselves. There was even talk of a merger. But slowly, SAP lost faith with its young protégé, and loosened its ties before walking away from the relationship in 2003.

Meanwhile, Commerce One had decided to retrench: it jettisoned its e-marketplace offerings, and concentrated on becoming a web services company, providing software that linked up internal systems with external partners. This proved to be a brave but ultimately futile attempt to survive. By autumn 2004, Commerce One had exhausted the patience of its creditors, and had no alternative but to lay off most of its remaining staff and look for buyers for its technology. This decision "provides an avenue for this technology to create a positive impact in the future," was Hoffman's parting message.

Commerce One's software may well live on. While the over-exuberant predictions regarding the impact of ecommerce may have ludicrously inflated its self-worth, fundamentally the company sold software that benefits many organisations. Its failure to capitalise on that opportunity is damning.

Its one-time arch-rival Ariba has built annual revenues of $246 million after shifting away from e-marketplaces to e-procurement and spend management in reaction to changing market demand. It also acquired online auctions house FreeMarkets to bolster its sales with subscription revenue. In contrast, Commerce One failed to change gear quickly enough, despite (or perhaps even because of) the substantial nature of its technology.