WebGain, a new company spun off from Symantec's Internet tools division, believes it has found a potentially profitable niche: outfitting businesses with low-cost, easy-to-use Java development tools. The tools allow users to quickly build e-commerce software that links customers, employees and suppliers to the Web.
WebGain was formed in December when e-commerce software maker BEA Systems and investment firm Warburg Pincus Ventures bought Symantec's Internet tools division for $75 million.
The 60-person company today announced its name, a new acquisition and a product strategy that centers on Symantec's popular Java development tool, Visual Cafe. The tool allows software developers to use the Java programming language to build business software.
IDC analyst Sally Cusack said WebGain has the potential to succeed because the new company will be focused entirely on software tools. When the tools division was part of Symantec, the company was more focused on its more profitable PC utility and antivirus software business, she said.
"At Symantec, the tools were the poor stepchild to the rest of the company," she said. "WebGain has no baggage, no history they have to contend with, so they have a better chance at succeeding. It's a fresh start with new management, and people are more comfortable with the emerging (Java) standards."
Still, WebGain is tackling a market that has consolidated and seen profits evaporate in recent years. Independent toolmakers have struggled. Well-heeled software firms, such as Microsoft, Sun Microsystems and IBM, view tools as an important piece of their strategy, but not necessarily a big money maker. The software giants invest millions in tool research, development, and marketing but sell them at rock-bottom prices--or even give them away--to seed the market for big-ticket technologies, such as operating systems, database software and high-powered computers.
It's a strategy that was perfected by Microsoft and copied by its rivals. In the past six months, Corel bought struggling Inprise, Sun purchased Forte Software and Motorola acquired Metrowerks. And most recently, BEA and Warburg bought Symantec's tools division.
Analyst Anne Thomas Manes, of the Patricia Seybold Group, expects modest success for WebGain.
"It's hard to make a profitable go...by itself, but since WebGain is tightly aligned with BEA, it should survive," Manes said. "They're not going to be a gangbuster, (or) be a huge company. You will never see (any) development tool company have the power (they) once had."
Despite consolidation in the market, WebGain executives believe they will succeed due to the popularity of Java. WebGain executives said the company will sell software development tools targeted at businesses using Sun's emerging Enterprise JavaBeans (EJB) programming model to write their e-commerce software. Many software makers have adopted EJB as part of their products.
WebGain's strategy differs from other toolmakers, such as Allaire, which in recent years has rounded out its offerings with more expensive application server technology to run e-commerce sites and handle Web transactions.
Despite that, Menard believes the company can eventually generate more than a hundred million dollars in revenue a year, even though Symantec's Visual Cafe only made $25 million in revenue, according to 1998 figures from International Data Corp.
"We believe there's a market around Java. We think there's an opportunity to do for enterprise Java what Visual Basic did for Windows," Menard said, referring to Microsoft's development tool for building software to run on the Windows operating system.
WebGain will receive help from minority owner BEA Systems, which will sell WebGain's tools as part of its application server offerings. WebGain has built in better support for BEA's application server and will soon add improved support for application servers sold by the Sun-Netscape Alliance and IBM, Menard said.
Manes said the company's sales goals may be over-ambitious, but WebGain should see revenue increase as the Java market takes off and software developers need tools to tie all their programming efforts together.
"They plan to get additional products. Developing enterprise applications is not trivial, and you need tools that tightly integrate with the (Web page) design environment and the application server environment," said Manes.
To pump up its offerings, WebGain today announced it has spent an undisclosed sum to acquire Tendril Software, a maker of visual modeling software that gives programmers a graphical representation of business software as it is being written.
WebGain will sell the Tendril software and Symantec Java tool separately but also integrate them together as part of a combined product called WebGain Studio. To further round-out its product line, WebGain is also partnering with Macromedia, maker of a Web page authoring tool, and Object People, maker of software that links Java software to databases.