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Allaire buys Java start-up Valto Systems

The Web software maker enhances its e-commerce offerings by acquiring Valto Systems in a stock swap worth about $33.5 million.

Web software maker Allaire enhanced its e-commerce offerings today by acquiring Java start-up Valto Systems in a stock swap worth about $33.5 million.

Valto Systems, a two-person start-up based in Burlington, Mass., makes a Java-based application server technology that allows businesses to use the Web to link themselves with their customers and partners.

The move allows Allaire to better compete in the crowded but growing application server market, where several dozen companies--including Microsoft, IBM, the Sun-Netscape Alliance and Oracle--are fighting for a piece of the action.

A recent study by International Data Corp. ranks Allaire as one of the application server market leaders with about $20 million in revenue in 1998. The analysis firm predicts the market will grow from $453.8 million in 1998 to $2.4 billion in 2003.

Analyst Anne Thomas Manes, of the Patricia Seybold Group, said Valto's software is a good match for Allaire's existing product family. Allaire's popular ColdFusion development tool and application server is widely used by small and medium-sized businesses to build and run their business software, she said.

Valto Systems gives Allaire the technology it needs for customers to run more heavy-duty transactions and send business messages by using an emerging programming model called Enterprise JavaBeans (EJB), she said. The technology is supported by dozens of companies like IBM, Sun, and BEA Systems and competes against Microsoft's programming model based on the Windows operating system.

"Valto's application server fits in well with what Allaire does," said Manes. "People use Cold Fusion to build low-end, small, e-commerce Web sites. Some HTML you want to throw up [online]. Most used CGI scripts, but now you get to build them using all the standard Java component technologies."

With today's purchase, Allaire chief technology officer Jeremy Allaire said the company will integrate the Valto application server with its JRun Java technology from another recent acquisition. JRun is software that allows developers to use Java servlets and Java Server Pages, technology that lets Web pages include Java applications.

Allaire, which is attempting to court larger businesses, will support both EJBs and Microsoft's programming model, he said.

ColdFusion will continue to be a separate product and sit in front of the Valto application server, he said. Like other application server makers, Allaire is trying to lure more customers by offering more features. Allaire recently released new software that lets developers build and manage Web-based content. It includes e-commerce software, such as shopping carts and credit-card authorization, and personalization software, which profiles Web surfers and target information based on their interests.