IBM proclaims middleware dominance
IBM leads the middleware software market and is taking customers away from Oracle thanks to changes in pricing strategy.
IBM released new analyst data on Monday that shows Big Blue is the market share leader for service-oriented architecture (SOA) software, capturing nearly 75 percent of the market. This follows news last week detailing IBM's 31 percent overall middleware market share.
And while it's not surprising that IBM has a large share of the middleware market, what's notable is that much of the company's recent success has come with an added bonus--taking away Oracle customers.
Oracle introduced its Fusion Middleware product roadmap in 2008, which included the amalgamation of several acquisitions, including BEA and Plumtree. However, only some of the new product features have been delivered, while price hikes were quickly introduced and maintenance fees remain in place.
According to IBM Communications Manager Mike Azzi, this has resulted in a phenomenon they call "Fusion Confusion." Azzi claims that many customers are losing confidence in Oracle's ability to fulfill the promise of making all these acquired assets work together seamlessly, or without along painful roadmap. Azzi told me that in the last year, 450 companies decided to switch out Oracle for IBM technology for similar reasons.
Notable IBM takeaways include Adobe Systems, Huntington National Bank, and Bank of New York Mellon. According to IBM, all three companies mentioned Oracle's pricing and maintenance fees as primary reasons for switching. This is actually an important point both in terms of IBM pricing as well as for other players in the market, including open-source vendors.
Oracle tends to be somewhat flexible on pricing for software licensing but rarely if ever reduces the fees for maintenance and support. It's an admirable approach and one that has served the company well, but this data from IBM makes wonder how much longer Oracle customers will withstand these fees.
If the technology achieves the same result and is cheaper, users will sooner or later catch on. This is the basic adoption model that we've seen for the last 10 years in the open-source world as OSS vendors focused on providing a "good enough" solution at a substantially lower cost.
Lower prices (often free to start) have affected all major software vendors and only some have adapted their pricing strategies over the last year or so. It's clearly become a different world when customers are citing IBM as the cheaper alternative.
It will be interesting to see if and how these customer losses will change Oracle's perspective on pricing and whether IBM will continue to manipulate pricing in order to gain further market share.