In a market that is increasingly splitting between pure hardware vendors like Dell Computer and Gateway and combination hardware/software vendors such as IBM and Sun Microsystems, Hewlett-Packard's acquisition of Bluestone Software seems to signal a new strategy that will put it squarely in one camp or the other.
The question is, which way will it go?
HP's Bluestone deal could be the start of an acquisition binge during which HP will try to accumulate and integrate a complete software offering, of which Bluestone is only one part.
This strategy could ultimately prove difficult for HP, because the company could have a difficult time integrating a large number of software applications and infrastructure pieces into a coherent whole. And by doing so, it could put itself into a business characterized by uneven growth.
On the other hand, this deal could signal the creation of a larger software channel strategy. HP may be planning to use the Bluestone development tools in combination with its own software to try to create an environment within which numerous third-party players could run their software.
This would position HP to sell that third-party software through its sales channel and more easily attract quality software to its servers.
The emergence of the application server market heralds the opportunity to bring the direct sales model popularized by Dell to the system software world. Every major server maker is talking about pre-configuring server products with multiple types of software.
But few have the basic platform technologies necessary to pull it off. HP may be buying Bluestone to ensure it has the application server platform it needs to integrate the server appliance configurations customers want.
In the future, the server-side software market will likely be dominated by server appliance providers that combine their own offerings with third-party packages in their sales channels.
IBM, Sun, and Microsoft are poised to play. Dell, too, may emerge as a force, based on its intimate knowledge of the direct sales model. Oracle, BEA Systems, and Compaq should be expected to enter as well. HP's acquisition of Bluestone may well mark the start of an HP strategy to also participate.
This sale will probably turn into good news for application server leader BEA. Whenever a hardware vendor buys a "point" software supplier--a company focused on a single product--the software market leader usually gets a bounce. The hardware vendor never gets it as right and as quickly as folks predict, and customers turn to the companies that demonstrate the ability to deliver.
In this case, HP has just removed Bluestone from the market as a competitor to BEA.
Customers looking for application servers will increasingly be able to choose complete system software platforms from major players, such as IBM, Sun Microsystems, Microsoft, Oracle and BEA.
Buyers should expect further consolidation, as point system software makers, which jumped into the Internet market in the midst of the Web frenzy, will themselves be disappearing.
Given that system software standardization is making it easier to substitute one product for another, users should protect themselves from changes in the application server and middleware markets by keeping an easy exit in mind when they switch to new software.
Meta Group analysts Dale Kutnick, Peter Burris, Val Sribar, and David Cearley contributed to this article.
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