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How Long Can BEA Survive, Industry Asks
How Long Can BEA Survive, Industry Asks
Aug. 4, 2004 12:00 AM
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
WEBLOGIC TRANSITION WILL CONTINUE IN Q2
DOUBLE SPEAK BY ALFRED
BEA SUPPORTERS ARE MISSING THE BIG PICTURE
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.
BEA SHOULD JOIN ECLIPSE
EXPECT ALFRED TO GET FIRED IN THE NEXT 6 MONTHS OR
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.
WHAT ABOUT JBOSS?
ALFRED'S MOTIVATIONAL SPEECH
I'M NOT SURE WHO OR WHAT IS BRINGING BEA DOWN
The graph for the last 3 months tells its own story.
THEY WILL NEVER SEE IBM IN THEIR REAR VIEW MIRROR
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!!
BEA WILL NOT BE ABLE TO SURVIVE AT ALL IN THE LONG TERM
THE PART OF THE TAG LINE IS VERY REVEALING
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!
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