HP trims middleware products

Hewlett-Packard Co.’s recent decision to retire a large chunk of its middleware business partly ends its once impressive run at that business, according to experts.

Last month, the company announced it is eliminating its’ Netaction Application J2EE Server, Netaction Web Services Platform and Web Services Registry products – all gleaned from HP’s acquisition of Bluestone Software Inc. last year – as well as its in-house eSpeak initiative.

HP says it will instead focus its software development efforts around its OpenView network management portfolio, its Opencall communications suite and its Utility Data Center software for automating data centre operations.

HP says the decision was made mainly to help its’ software division become profitable by year’s end, analysts say the company was forced to act after losing an early lead in the middleware business.

HP laid out a vision for using software to create Web-based services at least as early as Sun Microsystems Inc., Microsoft Corp. and IBM Corp. In 1999 it proudly opened the doors to HP Labs, its renowned research division, to show how technologies such as eSpeak could be used to link people, computers and even objects in a distributed computing model, a concept it called CoolTown.

“They had many of the key pieces early on and didn’t execute or project a vision,” said Dana Gardner, an analyst with Boston-based Aberdeen Group Inc. HP’s middleware sat on the shelf for a long time, while their competitors rallied and put together a full software stack for Internet-based computing, he said.

“What we saw from HP was sort of a wishy-washy commitment to the software side of the business…only IBM has been successful at bridging the gap between software and hardware,” said Dennis Gaughan, research director at AMR Research Inc. in Cambridge, Mass.

He pointed to eSpeak as an “innovative” idea that was both ahead of its time and poorly marketed. Its fundamental constructs have much in common with the current Web services buzz, he added.

The early mindshare lead aside, HP is being pragmatic by retiring Netaction, said another industry observer.

“HP has done something pretty smart here,” said James Phillips, senior vice-president of marketing and products at Mountain View, Calif.-based Actional Corp., an application integration specialist.

Phillips said HP could no longer deny the strong market presence of middleware heavyweights IBM and BEA Systems Inc. and their ability to perhaps better serve HP’s middleware customers. In fact, BEA Systems is likely to become HP’s main strategic ally on that front, and observers say HP will try to prod its Java-heavy users in that company’s direction. Microsoft Corp. could be another strong candidate for HP customers who prefer to lean in that direction, he added.

Either way, the decision is “not a big loss for our business,” Phillips said.

IBM recorded far more new licence revenue growth than any other application server software vendor last year, but BEA Systems continues to lead the market, according to Dataquest, a unit of Gartner Inc. IBM outpaced the market with 71 per cent new license revenue growth, giving it a 31 per cent market share, up from 22 per cent in 2000. Rival BEA Systems increased its market share by one per cent to 34 per cent in 2001 with revenue growing two per cent, Dataquest said.

According to AMR, Netaction was ranked ninth in terms of revenue. “But they were happy customers,” said Gaughan. Netaction customers tended to appreciate the runtime on the deployment platform, but grumbled about the lack of available tools and community of users, he added.

Hewlett-Packard (Canada) Co. refused to divulge the number of customers in this country, and Rob Ireland, a company spokesperson, said only that “there will be some people” that are affected by the decision.

Ireland said the decision to revamp the middleware business came in part from HP’s own customers. “People have been wanting to select best of breed solutions,” he said. “That same mindset has been applied to the software division.”

Although HP says it will announce its official support – the company says it will offer at least three years’ worth – and migration plan by mid-September, Gaughan said Netaction users should experience little pain.

“In the short term it’s going to be a challenge,” he said. “(But) assuming you’ve stuck to the constructs of J2EE, it’s easier than going from Java to Microsoft.”

– with files from IDG News Service