IBM Cloud Authors: Yeshim Deniz, Pat Romanski, Liz McMillan, Carmen Gonzalez, Elizabeth White

Related Topics: IBM Cloud, Java IoT, Industrial IoT, Containers Expo Blog

IBM Cloud: Article

How Long Can BEA Survive, Industry Asks

How Long Can BEA Survive, Industry Asks

Related Links

  • How Low Does BEA Have to Go?
  • How Long Can BEA Survive, Industry Asks
  • Why WebSphere?
  • A Successful Ingredient Offers Choice
  • A Leader with New Customers

    The May issue of Java Developer's Journal (Vol. 9, issue 5), scooped the annual Gartner/Dataquest Report six weeks before it was published and asked the question, "How Long Can BEA Survive Against IBM?" The day after the report came out, BEA announced its quarterly earnings and its stock had dropped 23%.

    As predicted in the May issue of JDJ, the Gartner/Dataquest report showed that the proprietary application server market is dominated more than ever before by IBM, with BEA's share slipping for the second successive year.

    IBM's share in 2003, according to the annual study, hit 41.3% ($429.7 million) "up from 36.4% in 2002," while BEA's slumped to 27.5% ($286.2 million), down from 29% in 2002.

    The figures are a vindication of Armonk, NY-based IBM's approach to the Java app server market, especially bearing in mind that the total market fell in 2003 by 8.8% compared to 2002


    It was in 2002 that BEA first slipped from the top spot, dropping from 2001's 34% to 29%. In a race that began in 2000, it took Big Blue just two years to catch up. Oracle came in third to BEA in 2003, Gartner's study reveals, with a 19% market share.

    Joanne Correia, vice president of the Gartner/Dataquest Software Team and the analyst who has produced this particular study each year, confirmed, "IBM is gaining share in every market, whereas most vendors were flat or negative."

    Just two days after its stock dropped 23% - its biggest drop in more than five years - BEA came out fighting on May 19th, with the news (revealed by WebSphere Journal's sister publication WLDJ before the official announcement) that it was donating - to what CTO Scott Dietzen referred to as "Open Source Land" - the first open source application framework targeted at Java-based Web applications: "Project Beehive."

    "Project Beehive" is the name BEA has given to its release of the runtime application development framework from its BEA WebLogic Workshop tool and includes the controls in Workshop.

    Announcing the release to the world, Dietzen emphasized that this was no sudden shift in BEA strategy just to resist stock market pressures. "We had planned long-term to announce Beehive before eWorld," he said. "This is a foundational piece [of BEA's future strategy] and is the motivation for this announcement now, so that the Java community has a chance to assimilate and see how it fits into everything before our user conference next week in San Francisco."

    The response to the news was also strong, as opinions changed from firing the CEO Alfred Chuang to suggestions that HP, Microsoft, or Oracle may bid to buy the company.

    Rumors and suggestions appeared on the message boards that JDJ's publisher had warned Chuang back in his March editorial, Success, Arrogance, Rise and Fall," that the direction in which he was taking his company did not look good.

    Following is just some of the discussion on the BEA news, which includes the Gartner/Dataquest report, BEA's latest quarterly earning results, and Beehive.

    Story comments from the message boards

    Ouch...conf call mentioned that the WebLogic transition will continue in Q2 Translation: license revenue could be lower again.
    - Laid Off Last Summer

    Double speak, poor sales execution - excuses, excuses - Alfred blamed merger and acquisition for poor results. Meanwhile, Oracle and IBM are gaining license revenue - what the hell?
    - redhotchillpepperlover

    BEA supporters are missing the big picture. BEA got here basically selling app server to techies, first to market with the best product in a boom economy.

    To get to the next step, they need to sell their platform product against the big boys with more mature products and much bigger install bases to farm.

    The biggest hurdle is that they will use price as their sword. They can discount and give their software away because alternate lucrative sources of revenue exist for them. BEA cannot and that will be their Achilles heel. BEA does not have alternate revenue streams to compete to what amounts to "free." If they try the net, net is zero or negative license revenue growth.

    This is why this stock is getting bashed, not for their results today, but for expected results during the next quarter and beyond.
    - mpraps

    We do not understand why BEA is not joining the Eclipse Board? Eclipse is becoming the leading IDE. WebSphere Application Server is getting more and more market shares because of its integration inside WSAD and Eclipse. BEA and WebSphere are both great application servers!!!
    - Vlad VARNICA

    Folks, if you can't beat a dinosaur like IBM in the app server space, you have to ask yourself, how low have you sunk? Since when did IBM ever have a lead in any software space (apart from mainframe)?

    Alfred the magician's answer was to hire the crappy dinosaur execs from the laggards (IBM, HP) and bring them to BEA so that BEA could finally end up like a small IBM - formal, but really useless.

    Expect Alfred to get fired in the next 6 months or so and for BEA to have a sliver of a final chance of recovering.

    Expect to see this stock hover around the 6-7 range in the next few weeks. Could even go back to test support at 5, if the markets tank. Get out now longs. Shorts will make a killing on this in the next few weeks. IMO.
    - stockmeister88

    Aside from BEA and IBM, the report attempts to imply 31% in the "others" category. Independent industry analysis shows that JBOSS owns 24% to 27% of that. How is that not important and why was it not mentioned? Is the goal of the article to inform or to concoct some artificial metric called "commercial" and report on "commercial" application servers? What they mean by "commercial" is not that the products are used for industrial commercial purposes but rather that you paid a large sum for the product. Highly misleading and a real disservice to readers, in my opinion.
    - Robert Kashmir

    I will never forget his motivational speech to the sales force a few years ago. He said something like, "All of you must kick some ass and have fun." He must have been referring to management kicking the sales force's ass...and working there was definitely no fun! They turn over the sales force every year. Not a good use of money in my opinion.
    - foo_fighter007

    I am not sure who or what is bringing BEA down, but it seems unlikely to be journalism: 4 out of the 5 research firms listed here by Yahoo Finance recommended a downgrade on May 14 after their quarterly earnings report.

    The graph for the last 3 months tells its own story.
    - barthrh213

    Can BEA survive against IBM? Give me a break - they will never see IBM in their rear view mirror again. BUT, now they see Oracle in their rear view (despite their lame assertions that they don't). The real question is "can they survive against Oracle" - which is undoubtedly the database underneath the large majority of their installs. Microsoft is still operating on a largely obstacle-free non-Java parallel path, so no stopping them. But Oracle...that spells big trouble for the BEA gang. The fight with Big Blue is over, and if they aren't careful, the fight with Big Red could be their undoing.
    - John

    The fact is that Alfred has been a better CEO than 99% of all CEO's in existence.


    In fact, let's see how many of you can name another company that went from 0 to a billion dollars in such a short period of time....

    The fact is that Bill Coleman was in charge when BEA was formed, and Bill Coleman was still in charge when BEA became a billion dollar company!

    Alfred took over, decided to put ALL BEA's eggs in the Java/J2EE basket, and that strategy has failed!!!

    WebLogic Platform 8 (Alfred's baby) is basically dead on arrival - its sales have actually DECLINED the last three quarters. That is a failure my friend, nothing else.

    I've worked under both Coleman and Alfred - Alfred doesn't come close to Coleman. He's an engineer and has NO business running a company. He should be replaced, and I predict he will be replaced shortly!!
    Oh, and by the way....
    TOLD YA!!!!

    I am of the opinion that BEA will not be able to survive at all in the long term. My prime reason for this opinion is that I believe money cannot be made by just selling middleware. In most large accounts, IBM/Oracle/Sun are giving away middleware (app/web/portal/dir servers) to get more hardware and service revenue. It will be hard for BEA to compete with, for example, Sun's $100/employee middleware pricing model.

    Not good at all IMHO!

    The part of the tag line that is very revealing is this: "Protection from Vendor Lock-in."

    That is a very real problem for BEA sales right now. WebLogic 8.1 platform, as it stands now, is a very strong "lock-in" for BEA. There's all this "stuff" in the form of callable APIs, but if you develop to those APIs, you have to pay very big bucks to BEA and ONLY BEA to deploy whatever system you develop. You are "locked-in" to BEA for deployment licenses and maintenance fees.

    I guarantee you that the tag line was created in direct response to field sales feedback about why they aren't able to move the 8.1 platform in the quantities BEA had hoped.

    But how will Beehive help BEA?

    It smacks of a desperation move, a quick fix to stem the tide of the open source movement. It will also have a chilling effect on current 8.1 Platform deals, as customers hold off to see if they can get a cheaper or free open source implementation of what is currently available in Platform 8.1.

    Sorry longs, I don't think this bodes well for the long term, watch for pops and exit as painlessly as you can!

    IMHO of course!

    Related Links

  • How Low Does BEA Have to Go?
  • How Long Can BEA Survive, Industry Asks
  • Why WebSphere?
  • A Successful Ingredient Offers Choice
  • A Leader with New Customers
  • More Stories By WebSphere News Desk

    WebSphere Journal News Desk trawls the world of e-commerce technologies for news and innovations and presents IT professionals with updates on technology trends, products, and services in the WebSphere family.

    Comments (3) View Comments

    Share your thoughts on this story.

    Add your comment
    You must be signed in to add a comment. Sign-in | Register

    In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.

    Most Recent Comments
    Kirk Patrick 08/17/04 10:03:12 PM EDT

    Reads like a tabloid and insults intelligence of readers.

    Roger Lee 08/05/04 02:33:20 AM EDT

    Having worked with bea Weblogic (5.x-8.1)for the past four years and more recently Websphere 5.x I find these figures about market share totally unbelievable. IBM give the product away. Weblogic is a far superior product and the ease of development is far greater. WS is fine if you use WSAD and DB2!

    pawan 08/05/04 12:52:53 AM EDT

    What BEA needs to do now is to reduce costs and develop some platform from where they can compliment their J2EE business. The reason they cant compete with other big reds and blues is because all other can compliment their existing resources with something added e.g. the big red and blue have their databases. To sell to enterprises, you cant ask them to buy a middleware, becuase many dont understand the term of middle-ware. They will still go for some org that can offer them middleware and back-end(with some jazzy old-package-new-words things for free). Right, to state crudely, BEA needs a database of its own, and needs it real fast, if it wishes to compete in the market. Even though it seems really fool-hardy to think about it and even unrealistic, but BEA will have to sit tight and just cross their fingers that before they offer a complete solution, like the reds and blues, and that too before the market forgets them.

    @ThingsExpo Stories
    Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
    IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
    With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
    The Internet giants are fully embracing AI. All the services they offer to their customers are aimed at drawing a map of the world with the data they get. The AIs from these companies are used to build disruptive approaches that cannot be used by established enterprises, which are threatened by these disruptions. However, most leaders underestimate the effect this will have on their businesses. In his session at 21st Cloud Expo, Rene Buest, Director Market Research & Technology Evangelism at Ara...
    "When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
    No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...
    When growing capacity and power in the data center, the architectural trade-offs between server scale-up vs. scale-out continue to be debated. Both approaches are valid: scale-out adds multiple, smaller servers running in a distributed computing model, while scale-up adds fewer, more powerful servers that are capable of running larger workloads. It’s worth noting that there are additional, unique advantages that scale-up architectures offer. One big advantage is large memory and compute capacity...
    Artificial intelligence, machine learning, neural networks. We’re in the midst of a wave of excitement around AI such as hasn’t been seen for a few decades. But those previous periods of inflated expectations led to troughs of disappointment. Will this time be different? Most likely. Applications of AI such as predictive analytics are already decreasing costs and improving reliability of industrial machinery. Furthermore, the funding and research going into AI now comes from a wide range of com...
    We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA
    With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
    In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), provided an overview of various initiatives to certify the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldwide re...
    SYS-CON Events announced today that Enzu will exhibit at SYS-CON's 21st Int\ernational Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive advantage. By offering a suite of proven hosting and management services, Enzu wants companies to focus on the core of their ...
    Amazon started as an online bookseller 20 years ago. Since then, it has evolved into a technology juggernaut that has disrupted multiple markets and industries and touches many aspects of our lives. It is a relentless technology and business model innovator driving disruption throughout numerous ecosystems. Amazon’s AWS revenues alone are approaching $16B a year making it one of the largest IT companies in the world. With dominant offerings in Cloud, IoT, eCommerce, Big Data, AI, Digital Assista...
    SYS-CON Events announced today that Cloud Academy named "Bronze Sponsor" of 21st International Cloud Expo which will take place October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara, CA. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud com...
    SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business...
    SYS-CON Events announced today that GrapeUp, the leading provider of rapid product development at the speed of business, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market acr...
    SYS-CON Events announced today that Ayehu will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara California. Ayehu provides IT Process Automation & Orchestration solutions for IT and Security professionals to identify and resolve critical incidents and enable rapid containment, eradication, and recovery from cyber security breaches. Ayehu provides customers greater control over IT infras...
    In his session at Cloud Expo, Alan Winters, an entertainment executive/TV producer turned serial entrepreneur, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to ma...
    SYS-CON Events announced today that CA Technologies has been named "Platinum Sponsor" of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business - from apparel to energy - is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
    SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.