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    IBM Disputes BEA Application Server Claims

    Written by

    Darryl K. Taft
    Published August 19, 2002
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      IBM is disputing recent claims by BEA Systems Inc. that BEA is supplanting IBM in application server deals and beating it in head-to-head competitions.

      Last week, in a call about its second-quarter financial results, BEA officials claimed that in more than 200 instances during the quarter the company beat or replaced IBM in deals.

      Officials at BEA, of San Jose, Calif., issued a press release Aug. 14 that said they beat IBM in more than 210 head-to-head competitions during the quarter ended July 31. In 125 of these cases, customers chose BEAs WebLogic over IBMs WebSphere despite WebSphere being the incumbent platform, BEA officials said. That number includes 94 cases where WebSphere customers chose BEA for new projects, and 31 instances where WebSphere was removed and replaced with WebLogic.

      IBM, of Armonk, N.Y., refuted the claims. Scott Hebner, IBMs product manager for WebSphere, questioned BEAs numbers.

      “They have been very aggressive going after IBM and WebSphere,” Hebner said. “They had negative 28 percent licensing revenue growth. Theyre seeding stories about win rates, but they are not talking about their revenue growth.”

      BEA reported a 16 percent decrease in revenues—to $225.9 million—and a drop in software licenses of 28 percent.

      “BEA is being highly aggressive to the point of not having credibility. If these numbers are true, why would they grow a negative 28 percent?” Hebner asked. BEA is “trying to create distractions [from their losses] by going on the attack. BEA is a company in desperation.”

      Hebner said the disruption made by the close of WebGain Inc.—which made tools for WebLogic developers—and the sale of its technology to Togethersoft could create problems for BEA in its developer community. He also said WebSphere Version 5, which is due out next month, will enable developers to build and enable WebLogic applications in an IBM environment.

      During the earnings call, BEA President and CEO Alfred Chuang said BEA has an advantage over its competition because it stands as “the only nonproprietary solution” available that is not paired with hardware or services.

      Analyst reports show the two companies essentially neck and neck in the application server race. Giga Information Group Inc., of Cambridge, Mass., reported both companies had a 34 percent share of the market last year. Gartner Inc., of Stamford, Conn., reported BEA ahead of IBM with 34 percent share, compared with IBMs 31 percent.

      Mike Gilpin, an analyst with Giga, said he can see both companies having a valid point of view, “yet IBM still is growing revenue in this space while BEA is not. Yet we have to be careful in looking at IBMs revenue, because its part of a larger whole and more difficult to analyze clearly, since its not broken out separately in the full financial reports.”

      John Rymer, research vice president at Giga, said that until both companies provide additional data, the market share race is only speculation.

      “BEAs contention that it is beating IBM nine out of 10 times could apply to J2EE [Java 2 Enterprise Edition] project wins,” he said. “In this market, it is often the case that even if IBM sells an enterprise contract to a large company, BEA or another vendor is brought in under the radar by a project team as an exception. In that situation, both companies can legitimately claim to have won the same account.”

      Oracle Corp. is hoping to make some noise in the market, particularly given its recent deal with Dell Computer Corp., whereby Dell will resell Oracle9i Application Server on its servers—both Windows and Linux-based, said Thomas Kurian, senior vice president of Oracle9i Application Server, in Redwood City, Calif.

      Kurian said Oracles application server is the fastest growing application server on the market.

      “The Dell relationship is broadening our channel presence,” Kurian said. “Were making sure the product goes through the indirect channel, where we have 3,000 resellers, ISVs and system integrators.”

      Kurian said that according to International Data Corp. numbers, Oracles market share has grown from 4 percent to 12 percent over the last year.

      Still, IBMs Hebner said Oracle has a lot of ground to cover before catching IBM or BEA.

      Darryl K. Taft
      Darryl K. Taft
      Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.

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