When the dust settles?

by Steve Anglin

Related link: http://www.oreillynet.com/cs/weblog/view/wlg/1537

When the dust settles from all the speculation, rumors, and actual M&A (mergers and acquisitions), you should see the following types of Java middleware out there. The types I speak of are evolved or extended middleware, which now encompasses databases, as well as development and productivity tools such as IDE.

This new middleware trend enables hardware server sellers and middleware providers to offer complete, bundled software suites as a way to better compete, improve performance and/or increase server sales and revenue. To accomplish this, many of the larger firms are conducting aggressive M&A with smaller, cash-strapped firms who have little or no value in today's equity markets and/or continue to struggle for market share in their respective areas of expertise.

When all is said and done, expect to see a highly consolidated Java middleware suite or extended Java-based Web application server market of players, which may likely look like this, if HP acquires/merges with BEA, etc.:

The Big Three

  • HP: HP-UX with BEA WebLogic application server suite, which includes WebLogic, WebLogic Workshop IDE, and database product TBD. Database product may likely come from a partnership or M&A with Sybase.

  • Sun: SunONE product suite: Solaris OS (and Linux long-term)with iPlanet Web Application Server, Forte for Java IDE, and database product TBD. Sun currently partners and invests in several minor players. Sybase may also be a possibility long-term if it's still available.

  • IBM: IBM/Red Hat Linux OS with WebSphere application server with IDE (VisualAge for Java will be replaced by a commercial, professional version of Eclipse), Web services e-directory software from Novell and IBM's very own DB2 database software.

What about Oracle, Borland and the others?

You might ask where's Oracle in all this. Well, Oracle is the wildcard that offers its Oracle 9iAS suite, which is a Web app server and database solution which comes bundled with Oracle's very own IDE, JDeveloper. Unlike HP, Sun and IBM, Oracle doesn't have servers to sell. Instead, they sell their softare/middleware suites and licenses to government and institutional agencies, which has received much scrutiny of late. Politically, Oracle has dug itself a hole with the major server vendors and now the government, which puts itself in a very precarious situation. Long term, this could mean a lot of things including M&A with one of the big server vendors above. For example, Sun may be the most likely interested, but reluctant, partner or even acquirer, long-term. We'll see.

What about Borland? Borland has a similar situation to Oracle. It not only has JBuilder with Web services IDE, but it also has Web application server and databases (i.e., Paradox, etc.). While it can bundle as a complete, extended Web app server or middleware suite, Borland does not have servers to sell. Long-term, it will likely partner or even be acquired by one of the big three. If I had to bet, that would be IBM. Of all of Borlands tools, JBuilder would have the most value, especially to IBM if the commercial version of Eclipse does not fair well.

What about these players: Sybase is particulary inviting as a target for the big 3 above as a database solution, perhaps in lieu of something like Oracle. Novell will likely be acquired by IBM, given that IBM already uses/has used Novell as a distribution channel for its WebSphere. Players like IONA with some of its CORBA interoperability tools will be acquired by one of the big 3 to augment already existing tools. Etc.

Long-term, I believe companies like Oracle, Borland, IONA, etc. that offer only accepted software solutions will struggle as the value of middleware software diminishes over time. Even new product prices will go down from the current levels you see, given the following:

  • Companies have done much of their IT hardware-middleware-software purchasing in the late 90's.

  • Revised company budgets and greater investor scrutiny on spending.

  • The growing acceptance of open source Java implementations and tools in the corporate environment.

  • There are over 4,000 open source Java and XML projects.

  • Anti-competitive licensing practices are under review and revision; just see the news between Oracle and its state software licenses.

When the dust settles

In time when the dust settles, there will be the big three of HP (BEA, Sybase, Borland (with Rational)?), Sun (Novell/i-Planet, etc.), and IBM (Novell, Borland?, Red Hat, etc.). Oracle may be out in the cold if it's not careful.

How do you see this market shaking out, when the dust settles?