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SilverStream revamps e-commerce software strategy

Upstart SilverStream Software is beefing up its family of e-commerce software to avoid being crushed by giant competitors such as Microsoft and IBM.

    Upstart SilverStream Software is beefing up its family of e-commerce software to avoid being crushed by giant competitors such as Microsoft and IBM.

    SilverStream this week unveiled a new strategy to provide businesses all the software they need to build and run e-commerce Web sites that connect to customers and partners.

    The strategy is similar to other contenders, such as Allaire and Bluestone Software, which are trying to compete against software heavyweights such as Oracle, Sun-Netscape Alliance and BEA Systems in the red-hot e-commerce software market.

    Like many of its competitors, SilverStream has historically sold application servers, technology often described as the operating system of e-commerce Web sites. Application servers run business software and handle transactions, such as Web surfers' requests to buy products online. But with the application server market consolidating, SilverStream needs to offer more e-commerce products to survive, including software for creating and managing Web content.

    "Having an application server doesn't differentiate you in the marketplace," said Forrester Research analyst Josh Walker. "Having a full suite of different applications is more attractive and will help SilverStream win customers."

    In the past several months, SilverStream has acquired several companies to spruce up its product line and improve its consulting services.

    Like its competitors, the company will build Web portal software that allows businesses to build corporate portal sites for employees to access email, news and corporate resources. Portals for suppliers and partners help businesses conduct trades online, while portals aimed at consumers can profile Web surfers and target information based on their interests and buying habits.

    SilverStream is also following rivals in entering the emerging integration software market. The software allows companies to link their different computing systems, so they can exchange data and conduct businesses over the Web.

    Analysts say the product strategies of SilverStream, Bluestone, Allaire and other smaller software firms are smart and will allow them to compete in the crowded market.

    "They have all survived the first round of shakeout in the application server market," said Walker, referring to companies such as Vision Software and Novera, which have dropped out of the market. "It's been a constant uphill battle, but they've demonstrated there are enough customers out there to support them. Their longevity is not a question. They have a significant customer base."

    SilverStream's stock price has dropped from a high of $132 to about $40 in recent months. But analyst Gary Abbott, of Punk Ziegel & Co., is still enthusiastic about the company.

    In the 1999 fourth quarter, the firm lost $5.6 million, or 34 cents a share, on revenue of $9 million. Abbott said yearly revenue has grown 239 percent from 1998 to 1999, and he expects the company to post its first profit by the end of next fiscal year.

    "Investors have gotten scared of Internet companies and their lack of earnings, but SilverStream is emerging as one of the leaders in the Internet infrastructure software market," said Abbott, who gives SilverStream a "buy" rating.

    SilverStream has always touted its software as easy-to-use by giving software developers drag-and-drop tools to build their applications. Company executives said the new portal and integration software, expected this summer, will also be simple to use.

    Meta Group analyst Craig Roth said SilverStream can parlay it's ease-of-use advantage. "They're providing a framework that allows them to very quickly and easily build (Web) applications," he said, noting that IBM's software requires numerous consultants to integrate products.