BEA Chief Downplays Open-Source Alternatives

Whats been the impact of the open-source competition? Where do you see JBoss?

I have two conflicting pieces of intelligence. I have heard that theyre doing very well. And they are growing, but the numbers dont demonstrate them as a growing concern. Ill be very honest with you. I sat in a room last quarter and I thought that in Q3 that could be a challenging, competitive quarter for us. So I asked some of our guys who are you seeing. They said we saw Oracle and they took two deals away from us in the government. I said how many deals did we close in the quarter? They said 2,000. I said OK.

So I said who else do you see? They said, oh, we see JBoss and this is a problem. I said: How many deals did you lose to JBoss? They said, none, but we dont know what deals that were not involved in. (Laughter) Salesmen always find an excuse.

So thats what my intelligence is telling me. Their revenue is probably in the low 20s [millions] and about eight to nine million of that is what they call maintenance revenue. And the other is consulting revenue. And you have to put the consulting revenue aside because anybody can be a consultant. We can be a consultant for JBoss.

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So with $8 million worth of maintenance ... I told our head of American sales, how long did it take you to do that $8 million? He said, I dont know. I said probably as long as this conversation. So even if they grow 100 percent, they are not going to put a ding on you. Is this stuff self sellable? He said no, we see JBoss salesmen. I said how do you sell something thats free and rely on maintenance revenue thats going to be amortized over a three-year or five-year deal? So I asked: Why are you worried about something that doesnt exist?

I think the marketplace so wants to believe theres a transition that everything is going to become open source. They are believing in something that really doesnt exist. Will JBoss work? I think yes. Only if the J2EE [Java 2 Enterprise Edition] APIs become obsolete. If they become a commodity and nobody programs to J2EE anymore, then people will use JBoss. Because then you can pop JBoss and put it on WebLogic on the fly. Were not there yet. JBoss is not Linux, and Linux is not free.

Even if JBoss becomes part of, I dont know, Red Hat, its a different model. Linux has an "open" source community. JBoss does not have an open community, not everybody can join. If it was truly open source there should be BEA contributors to JBoss, but nope, we cant. Its a selective process they select. They have full control.

And another thing that bothers me more ... Well, you might talk to Marc Fleury [CEO of JBoss Inc.], but nothing that he claims, I can substantiate. And I dont think he can substantiate. That really bothers me. Integrity is everything in the enterprise software business.

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People rely on us to use the software ... In last count, there were more than 600 million mobile numbers in this country [China]—we cant say 655 million subscribers because one subscriber could have more than one number. But there are 655 million numbers and every single one of them gets a bill issued either electronically or printed using BEA technology. This is no joke.

When do you see a move away from competition based on products to competition based on who has a better implementation of a standard?

When our size is big enough. And thats a changing target. People will argue that if youre the size of BEA, which is $1 billion plus, then youre ready. Well, I think that landscape changed a little bit. Now I think you have to be the size of probably an SAP—which is now the third largest software company in the world.

I think as times get better and projects start opening up again its going to swing back. And when a lot of startups start showing up again, I think BEA will easily be viewed as a force in the marketplace so that we dont have to play this little game any more.

We can play with the brand; we can play with the space itself. We dont have to be competing product-to-product and letting people just copy our stuff. We dont have to do that anymore. But right now we have to.

But thats part of what I see in AquaLogic, part of what you guys were involved in with the SCA [Service Component Architecture] announcement last week.

Sure. Sure. You know, either you break out and you do something new, so people cant catch you—which is something weve had to do—or youre sort of a sitting duck waiting for people to get enough implementation.

I have to tell you, though—this is a much better time ... because you have people trying to chase you again. It feels much better than when youre in the same kitchen and there are a lot of cooks in there. And even if you have more utensils than anyone else, customers say, ah whatever, you all pretty much cook the same thing, we just want an omelet. And you have to say, well, no you dont want an omelet. Thats what IBM does.

You guys have promoted a varied development approach with your blended strategy, but arent you also at the same time recommending a single toolset?

No, people are using Struts, people are using a lot of open-source stuff that you can blend into the new Workshop, that you can use to push stuff out of Eclipse. And combining some of those frameworks is fine and youre not required to use BEAs framework at all. A lot of them you dont even use BEAs tools. You can use IBMs tools. You can even use IBMs Rational tools to develop an implementation and deploy it on WebLogic.

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