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IBM pulls away in app server race

A new study says Big Blue has nabbed the lead from BEA Systems in the market for Java application server software--used to run custom business applications written in Java.

IBM has taken the No. 1 market position away from rival BEA Systems in the hotly contested field of Java application server software, according to a study to be released this week.

Big Blue's share of the market for the software--used to run custom business applications written in Java--moved from 31 percent in 2001 to 37 percent in 2002, according to new research from Gartner Dataquest. BEA slipped from the top spot, dropping from 2001's 34 percent to 29 percent last year, the Gartner study says.

"The tight horse race that started in 2000 between IBM and BEA was won in 2002 by IBM as they continued to gain market share in all categories," said Gartner analyst Joanne Correia, the study's author. "IBM gained market share of new-license revenue at the expense of BEA and others."

IBM and BEA collectively control 66 percent of the market for application servers that adhere to the Java 2 Enterprise Edition specification, according to Gartner Dataquest numbers. Sun Microsystems' Sun ONE (Open Net Environment) and Sybase's Enterprise Application Server run a distant third and fourth, with 4 percent and 2 percent market share, respectively. Other, smaller companies fill out the market picture. Microsoft does not sell a Java application server.

The $1.1 billion market for Java application servers grew rapidly in 1999 and 2000 but cooled off substantially last year, growing at just less than 2 percent. The compound annual growth rate over the past four years was nearly 43 percent, according to Gartner Dataquest.

As a result of the sluggish growth, Java server software providers have started to create so-called application platform suites. These packages of server applications, which are targeted at large corporations, include the application server as well as specialized integration software and corporate portals, which present information from many data sources in a Web browser.

In the application platform suite category, IBM topped its competitors with 20 percent of the market, compared with 11 percent for BEA and 5 percent for Oracle, according to the study. In individual categories for integration software and portals, IBM again came out on top in 2002. In integration brokers, Tibco and WebMethods held the second and third slots, respectively. In portals, SAP and BEA held the second and third positions, respectively.

Correia said the growth outlook was "cautious" for all product segments within what Gartner Dataquest calls the application integration and middleware market. On top of slow software spending at corporations, Java application server providers will continue to face price competition from rivals and open-source alternatives, such as JBoss.

"The bundling of application servers into the operating system by Microsoft and Sun, and the shareware movement, will continue to put revenue pressure on this market for the foreseeable future," Correia said.