When Alfred Chuang, the chief executive of the Java platform software company BEA, bounced onto the stage amid the dry ice at the company’s eWorld conference in Orlando this March, he appeared to be in a triumphant, celebratory mood.
Chuang is not a natural showman, but he went on to proclaim that his company’s latest product, Weblogic 8.1, is “big… bigger than big”, and predicted that its launch will “mark 2003 as a major inflexion point in the history of enterprise computing”.
Such hyperbole is uncharacteristic of BEA, a company that has been criticised for its low-key marketing and is renowned for its Silicon Valley-style geekiness. But the celebratory tone is forgivable.
After all, just a year earlier, BEA, having reported a 10% quarterly revenue drop, was fighting off criticisms that it was over-reliant on its Java application server, a product category which many analysts believed would soon be commoditised, or worse, would eventually succumb to open source alternatives.
And in October 2002, Ted Schadler of the leading analyst firm Forrester Research wrote a report saying that BEA would “not be a long term survivor”. It was simply not big enough, and would be snapped up by a larger rival, perhaps HP or Sun, said Forrester.
Even on the eve of its eWorld conference, AMR research analyst Bruce Richardson warned: “BEA is surrounded by heavyweights. Everyone wants a piece of the business.”
That background perhaps explains why BEA executives now feel so upbeat. In February, the company turned in an impressive set of fourth quarter results – with revenues up 8% to $249 million and net profits up threefold to £35 million.
Chuang knows, however, that even big, positive numbers won’t silence the BEA sceptics. “I thought if we got to $1 billion [annual sales], we wouldn’t be asked these questions anymore,” he told Information Age. Now, however, he realises such questions won’t go away while there are big, architectural issues in software to be decided.
That is why, at the eWorld conference, BEA projected such a mood of confidence. Its key claim is that it has brought together a number of development and integration tools onto one platform suite, WebLogic 8.1 – a revolutionary development, the company claimed.
The move not only underlines BEA’s move into the portal development and application integration markets, but means that programmers can now use WebLogic for all development and integration, ending a long-standing divide in the IT department.
“Until today, it was chaos. The left hand did not know what the right hand was doing,” said Chuang. Now the message is: “All integration is development and all development is integration.”
Customers and analysts are in little doubt about the significance of the move, in terms of vision, although some raised questions about execution and delivery. One customer at the eWorld conference said that most of what BEA is now promoting as a platform was, in fact, already available in earlier versions of WebLogic, it was merely less integrated.
The new parts mostly relate to the integration tools. In offering an integrated development, integration and management environment, BEA has signalled its clear intention to fight for a position as an end-to-end software platform provider – a stance that puts it head-to-head with IBM, Microsoft and perhaps even SAP.
That is why analysts such as Forrester and AMR, while praising the strategy and the products, think BEA’s positioning is far from secure. Even with $1 billion in sales and a product that is now far beyond the threat of commoditisation, it is still a minnow when compared with these giants.
The plan is clearly ambitious. A report by John DiFucci of CIBC said: “We were impressed with BEA’s vision, but continue to believe there is meaningful risk inherent in attaining that vision… BEA has yet to deliver much of this platform.”
That explains its aggressive stance towards IBM, which is putting forward much the same message. BEA repeatedly pointed out that while BEA has completely re-engineered WebLogic’s components into one integrated suite, IBM’s WebSphere remains relatively fragmented.
To underline the point, Carly Fiorina, the CEO of BEA’s close partner Hewlett-Packard, joined the attack, pointing out that IBM’s WebSphere has 344 different, non-integrated components. In response, IBM argued the figure is more like 70, and, on the second day of BEA’s conference, announced a plan to tightly integrate some of them.
Meanwhile, BEA’s move into the integration software business has sparked a flurry of indignation among the specialist suppliers, who criticised BEA’s stance on integration as naïve or superficial. Announcing that BEA had already recorded $20 million in integration licence sales, Chuang suggested that most of these suppliers would not survive or would be driven in to niches.
