With middleware vendor BEA Systems Inc. recently announcing its acquisition by Oracle Corp., the head of one independent vendor doubts the market consolidation means the pure play independent entities will get left behind.
It’s the start of a new era of innovation in the market originating from the open source community and the fact that independent entities can continue to create technologies that are platform-independent, said Peter Zotto, CEO of Waltham, Mass-based middleware vendor Iona Technologies PLC.
“The challenge will be for the larger more inflexible vendors to keep pace with the rapid innovation taking place in the middleware/integration space and in particular from the open source community,” said Zotto.
The middleware space has undergone considerable consolidation in the last several years, a segment in a recurring cycle preceded by a period of standardization, and before then, innovation, he said.
Aside from the Oracle-BEA merger, other recent acquisitions, said Zotto, like Sun Microsystems Inc. and MySQL AB , and Software AG and webMethods Inc, illustrate that trend. Zotto said he thinks this also signals the end of that consolidation period for the industry heavyweights.
The acquisition is a step in industry consolidation designed to eliminate redundancies in a market that’s hit by commoditization and where products are losing differentiation, said Cedric Thomas, CEO of Belgium-based OW2 Consortium, an open source software community that develops component-based middleware for large scale distributed systems.
“That’s the trend that the Oracle-BEA merger reveals,” said Thomas.
This complements what OW2 does because not only does open source thrive on commoditization, it’s also very compatible with middleware, he said. “Companies cooperate on middleware while competing on delivering the business solutions to end users.”
OW2, said Thomas, is in the right place at the right time.
There’s ample innovation to be had in the middleware sphere and this is a good time for the independent vendors to garner some attention, said Thomas, adding that although large amalgamated entities have the resources to innovate, they’ll be preoccupied with consolidating customer bases and tending to the overall general management required of integration.
Zotto agreed that the new period of innovation is a “tremendous” opportunity for independent entities to leverage their unique portfolio. Iona, in particular, he said offers a “hybrid deployment approach” that allows closed and open source software to work alongside each other.
But despite the fewer resources that an independent may have, the smaller size is often better suited for innovation, said Thomas, because there’s less to lose versus what’s at stake with larger established entities. “That’s the good and bad of innovation.”
He added that the bulk of OW2 members are small and mid-sized companies who work on flexible middleware technologies that adapt to varying environments given changing business rules. “Middleware is not just a monolithic integrated stack of software. Middleware has to be agile, innovative, easy to administer.”
But Thomas said he doesn’t want to sound arrogant because the reality is small independents still need to exercise caution with new business models, unlike their more established counterparts who have the luxury of relying on well-proven models. “We think we have good technology but we still have to convince the market.”
From the perspective of the customer, he said, they’re probably split on whether they prefer products from an independent pure play vendor or one that’s become part of a larger entity’s stack. “I won’t use that to understand the market,” he said.
Customers will always be looking for alternatives to the large heavyweight stack vendors who offer the “one size fits all approach”, said Zotto.
Actually, he estimates rationalization of the Oracle-BEA portfolio might require a two to four year-window, a period of time during which he thinks customers should seek alternatives to what will inevitably become costly consolidated offerings.
“Customers should seek a distributed alternative to proprietary, stack-based middleware in order to ensure future interoperability and protect their investments,” said Zotto.