The more than 50 software makers that crowded into the red-hot
application server market a year ago have consolidated and clear leaders
are beginning to emerge.
Oracle, Sun, Apple Computer, and Allaire captured the most revenue in the
application server market last year, according to a new study by
International Data Corp.
As the market consolidates, the remaining players--still numbering in the
dozens--have all touted their products' speed and reliability in handling
Web transactions. Now they're adding new e-commerce-related features, such
as tools for Web publishing and building Web storefronts, to attract
customers in a market that is expected to grow from $453.8 million in 1998
to $2.4 billion in 2003, the IDC study said.
An application server is software that acts like a traffic cop between Web
browsers and back-end computing systems, such as databases. It runs business
software and handles transactions, such as a Web surfers' request to buy
"There is a movement toward making the application server the core of
virtually every major trend of any industry, whether it's portals, corporate
intranets or e-commerce sites, on the Web," said IDC analyst Steve Garone.
"So it behooves application server vendors to branch out to more total
Right now, Oracle leads the pack, according to the IDC study. The database
giant raked in $70 million in application server revenue in 1998, according
to IDC. Forte Software, recently acquired by Sun, placed second with $44
million in revenue, followed by Apple Computer, Allaire and Information
Builders, who all hovered in the low $20 million range, the study found.
With Sun's acquisition of Forte, the
Sun-Netscape Alliance now has three of the top 10 application servers in its
arsenal. The company plans to merge the servers into one unified product.
Sun's NetDynamics application server earned $18 million, while Netscape's
product netted $17 million, the study found.
About half a dozen software firms made between $10 million and $12 million
in 1998. They include BEA Systems, Bluestone, GemStone Systems, Silverstream and
For the most part, software makers have settled on two competing programming
models for application servers. Sun Microsystems and its squad of Java
programming language supporters, such as Oracle, IBM, GemStone and
Persistence, support the Enterprise JavaBeans programming model, while
Microsoft supports its own programming model aimed at the
Windows operating system. But some companies such as Apple support neither
and have their own programming model.
IBM, considered a leader in the application server market, barely registered
in the IDC study as the company was still building its application server in
1998. Another big player, Microsoft, was not listed in the study, because its application server was built into its Windows operating system, making
revenue figures hard to track.
To compete in the crowded market, many software makers are specializing by tacking on new software for e-commerce, Web publishing and application integration.
"It's much easier to sell complete solutions than to sell just an
application server," said analyst Anne Thomas Manes, of the Patricia
While Sun-Netscape Alliance was one of the first to sell a family of e-commerce-related
software, most application server makers have had to recently build the
the new technology themselves, partner or acquire companies.
Several software firms are offering customers pre-written software code to
help programmers quickly build e-commerce applications.
BEA Systems, for example, recently purchased a start-up called Theory
Center, which makes pre-built Java software code, called components.
Similarly, Oracle offers
pre-built software code, called components, that handle connections to
databases, while IBM is adding
support for EJBs in its components for building financial and human
Application server makers are also diving into Web publishing software--which lets businesses manage Web content--and personalization software, which profiles Web surfers and targets information based on their
While many are partnering with content management software makers, such as
Vignette and Interwoven, others like Allaire have built the technology themselves.
Vignette, however, plans to take advantage of the growing application server
market by reworking its software as components that support both Microsoft's
and the Enterprise JavaBeans programming model.
"We're in a fabulous situation," said Bill Daniel, Vignette's vice
president of products. "There are no big independent application server
vendors anymore. Bluestone and GemStone--those guys are small. And you've
got these little guys moving up to applications and trying to
Application servers are also adding software for business integration
software. To connect employees, customers and partners together on the Web,
businesses need to integrate business software that was never meant to communicate
and interoperate, such as mainframe software and human resources and
The Sun-Netscape Alliance, for example, will have an adapter that connects
its forthcoming iPlanet Application Server 6.0 with its Forte Fusion
integration software. Oracle recently announced the Oracle Integration
Server, which includes business messaging software based on the Java
programming language and Extensible Markup Language (XML), a popular Web
standard that helps businesses exchange data.
Some analysts even believe application server makers and firms who build
e-commerce, content management and business application integration
software could all potentially consolidate in the future. Integration
software maker TSI recently purchased application server maker Novera, for
Doculabs analyst Jeetu Patel said all the different software companies who
make application servers, application integration software and Web
publishing and e-commerce tools, all need each other.
"Application server vendors will start doing a lot of work with application
integration vendors and e-commerce vendors," Patel said. "It's a logical