BEA Systems is gradually losing momentum to its application server rivals, but it has faced challenges before and will likely continue to be a leader through at least 2005.
An advantage BEA has is that it built a leadership
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In this environment, BEA started by leapfrogging its rivals through acquisition. It acquired Tuxedo, excellent middleware technology, which Novell had mishandled and which BEA boosted through its sales and marketing prowess. It did the same with WebLogic. BEA has prevailed largely through superb execution and thorough understanding of the requirements and life cycle of its target market of large-scale systematic enterprise projects.
Recently, however, IBM has begun to gain--in fact, it leads in some regions outside the United States. Sun Microsystems has grown into a fiercer competitor by aligning itself more closely with iPlanet (its joint venture with AOL Time Warner). Smaller competitors in particular segments also have made progress--Iona Technologies, for instance.
BEA's challenge is to expand into new, overlapping areas, where it will face new competition. These areas include application integration, Web service technology, e-commerce technology, portal technology, and business-to-business technology.
The company has met such challenges before, as with the transition from CORBA (Common Object Request Broker Architecture) to Java and from online transaction processing to component architecture. It has also failed on occasion, as in application integration with its eLink initiative.
BEA remains a specialist, and to grow as Wall Street expects, it must do more than add functions incrementally; it will have to take a more radical approach. The company will likely tackle its new challenges as it has done in achieving its greatest past success: through acquisition, followed by great execution. Since e-business platforms are the next key area for BEA to target, Gartner believes that it will repair its eLink mistake by making an integration technology acquisition by the second half of this year.
BEA will likely continue to be a leader during the next five years, but the competitive landscape will even out. Microsoft will become a much stronger competitor in the enterprise market starting late in 2002, and Hewlett-Packard-Bluestone Software and Oracle could also become significant competitors. IBM and Sun Microsystems-iPlanet will remain BEA's closest competitors, and BEA's position in the next two years will be significantly affected by the resolution of the relationship between Sun and iPlanet.
(For related commentary on enterprise application servers, see TechRepublic.com--free registration required.)
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