Dataquest: IBM wins in app server market

IBM Corp. recorded far more new license revenue growth than any other application server software vendor last year, but BEA Systems Inc. continues to lead the market, Dataquest Inc., a unit of Gartner Inc. said Wednesday.

The worldwide application server market suffered a severe growth slowdown last year as companies curtailed IT spending. New license revenue grew 20 per cent, down from 92 per cent in 2000. New license revenue amounted to US$1.18 billion in 2001, up from $990 million the year before, Dataquest said.

IBM outpaced the market with 71 per cent new license revenue growth, giving the Armonk, New York, IT giant a 31 per cent share of the market, up from 22 per cent in 2000. Rival BEA Systems in San Jose, California, increased its market share by 1 per cent to 34 per cent in 2001 with revenue growing 23 per cent, Dataquest said.

“The net result of the IT spending slowdown and the more cautious tone for emerging new software companies made IBM a safe bet and helped it pull more application server revenue,” Joanne Correia, vice president of Dataquest’s Software Industry Research Group, wrote in a research brief.

BEA and IBM are by far the market leaders. Sun Microsystems Inc., Iona Technologies PLC and Sybase Inc. trail with 9 per cent, 3 per cent, and 1 per cent of the market, respectively, according to Dataquest.

Dataquest spots two trends in the market. It is splitting, with IBM and BEA offering high-end products that can handle millions of transactions per minute, while other vendors cater to those with lesser needs. Also, vendors are bundling application servers with other products; creating a new segment Dataquest calls application platform suites.

The trend of packaging application servers with other technologies will “increase dramatically” in 2002, Correia wrote. In fact, vendors including Oracle Corp. and Fujitsu Ltd. never sold an unbundled application server. IBM and BEA will also bundle application servers with, for example, portal products and development tools, Dataquest said, adding that unbundled application server products will continue to exist.

Dataquest predicts that the application server market will grow at a 22 per cent compound annual growth rate to just under $3.2 billion by 2006.

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