"We're the only independent portal company that has turned profitable. More than 14% of the Fortune 500 companies use Plumtree. No-one is closing more business than us," boasts Plumtree co-founder Glenn Kelman.

	Glenn Kelman, Plumtree

In support of Kelman's claims, the vendor of application independent portal software is displaying many of the signs of a healthy, fast-growing company. Sales doubled in 2001 to $80 million and the company continues to win the business of prestigious, big name customers – Cadbury Schweppes and the US Air Force signed up in the final quarter of 2001.

But its rapid rise and Kelman's bravado mask a range of growing weaknesses that could yet undermine the company.

First, Plumtree's claim to ‘profitability' is somewhat fragile. Despite the doubling of revenues, the company still posted a net loss of $7.8 million for the year to the end of December 2001 and a marginal loss in its fourth quarter.

More alarming is the attitude of analysts who are increasingly questioning the long-term viability of the portal market as an independent software sector. They suggest that portal technology could quickly become subsumed into the everyday functions that customers expect to have bundled with their enterprise application software.

Plumtree's much-delayed initial public offering (IPO) is intended to prove these doubters wrong and assert that it does indeed have a credible, long-term future as an independent company. It certainly does not need the estimated $76 million that the IPO will raise, argues Kelman.

The main charge levelled at Plumtree and other portal software vendors is that application-independent portals do not deliver significant enough business benefits and certainly do not justify the big-ticket prices of the major vendors.

Often, they provide little more than slick interfaces to email and perfunctory corporate data such as news, employee telephone directories and holiday allowances, claim critics.

And a number of recent bankruptcies amongst the many independent players have only served to highlight how overcrowded the sector is. Two European portal suppliers – Appsolut Software of Germany and Linq of Sweden – went to the wall during 2001, while US portal company Viador was de-listed from Nasdaq in October 2001 and is also doomed if it does not raise additional funds soon.

Furthermore, Plumtree and other pure play portal vendors such as Corechange, InfoImage, Mediapps and Epicentric are also being squeezed by increasing competition, most notably from IBM and enterprise application software giant SAP.

In particular, the major enterprise resource planning (ERP) software vendors are adding more and more capabilities to their portal offerings, which they can bundle with their core packages. PeopleSoft CEO Craig Conway foresees a time – he estimates within a year – when ERP software vendors will give away the portal element simply as a bundled feature.

As a result, ERP vendors are increasingly positioning the portal as a hub to connect multiple applications and a medium through which to conduct business transactions and group working practices.

The integration of applications required to achieve this goal, however, is broad and deep. It is not something analysts believe that Plumtree can provide with Gadget Web Services, the company's middleware connection technology.

Customers also say that this is an issue. For example, Plumtree's biggest customer, Ford Motor Company, has struggled to integrate the corporate portal with its underlying business systems. "Back-office integration is still an issue for us," says Bipin Patel, director for management systems at the US car manufacturer.

Lingering doubts about scalability also remain. Plumtree can point to its portal being deployed to 200,000 users at Ford as validation of the robustness, speed and reliability of the software. But the company's critics argue that its Microsoft Windows-based architecture still leaves it lacking in many respects. And although Plumtree offers a Unix-based alternative, analysts argue that it lacks functional parity with the Microsoft-based version.

Nevertheless, Plumtree is expected to forge ahead with its flotation before the end of May 2002. In the current negative economic climate, its timing could hardly be less favourable. Plumtree's management team might therefore be well advised to seek alternative avenues for raising the company's credibility other than Wall Street.