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January 27th, 2014

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Stuck with a duopoly

by Sathya Mithra Ashok - August 3rd, 2010 Tweet 0 0

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Is the middleware market becoming a duopoly, with users locked in to either Oracle or IBM? Loosely defined as software that integrates different pieces of software and enables application deployments, middleware is a critical cog in enterprise IT shops. Realizing the importance of this segment of IT, both IBM and Oracle have been opening up their checkbooks in recent years to buy up companies in the middleware space, adding to their significant middleware product portfolios. IBM has bought companies such as business rules software maker llog in 2008 for $340 million, SOA appliance maker DataPower in 2005 for an undisclosed amount, and business process management vendor Lombardi late last year, also for an undisclosed sum. Oracle acquired BEA Systems two years ago for $8.5 billion and Sun Microsystems for $7.4 billion, with that acquisition closing just weeks ago. Not content to rest on its acquisition laurels, Oracle bought SOA management vendor AmberPoint earlier this month for an undisclosed amount. The acquisitions bolster middleware product portfolios that already included technologies such as segments of Oracles Fusion middleware platform and IBMs WebSphere application server. Given the growth scenarios presented by IBM and Oracle, legitimate concerns can be raised about the risks of vendor lock-in and attendant rising prices that limited competition can bring.

http://www.cnmeonline.com/news/stuck-with-a-duopoly/

2014-01-27

Stuck with a duopoly | Information & Technology News, Analysis, Insights, Middle East

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At Oracle shop NASA Jet Propulsion Lab, systems engineer Floyd Teter, who is a member of the Fusion Council of the Oracle Applications User Group (OAUG), expresses concerns about both issues: The biggest piece of heartache that comes from vendor lock-in, of course, is cost. Meanwhile, alternative technology sources are becoming limited and switching is expensive, he says. The upfront cost of switching to alternatives if you can find alternatives is exorbitant, Teter says. Moving away from Oracle in his shop would cost millions, he says. IBM Softwares general manager, Craig Hayman, rejects the notion of market consolidation in middleware, because middleware itself is about integrating disparate systems. He also dismisses the idea of a market completely dominated by IBM and Oracle: The customer need is much bigger than any one vendor can provide. (Oracle declined to comment.) Options outside the IBM-Oracle duopoly But IDC analyst Maureen Fleming is one of several people who say that lock-in fears are overblown, even as IBM and Oracle consolidate their market grips. Alternative middleware solutions exist from companies such as Software AG, Red Hats JBoss group, and the open source arena. Fleming notes that JBoss has more momentum than either IBM or Oracle in bare-metal application servers. Tibco and Software AG also have momentum, she says. Theres a handful of companies that are doing really well. Bob Moore, president of the Chicago WebSphere User Group, concurs that JBoss is having an impact with its open source application server. JBoss is huge out there, says Moore, who is also president of the InfoTech Resources consulting firm. A user of both IBM and Oracle middleware sees open source as providing a haven from commercial vendor dominance. Having those open source options will keep Oracle and IBM from really raising their prices or putting a lock on the market because people can go to the open source community, says Michael Rulf, chairman of the OAUGs Fusion Council. For application servers, you always have the open source, concurs InfoTechs Moore. But JPLs Teter is not so sure open source is a viable check on the power of IBM and Oracle. Oracle grabbed a whole lot of the good open source software when it picked up Sun, including the GlassFish application server and the MySQL database, he says. This eliminates GlassFish as a competitive counterbalance to the WebLogic application server Oracle acquired when it bought BEA, he notes. Im a buyer, so I always think varied competition is good, Teter says. And while Oracle has done well by us, were concerned that were seeing a consolidation of suppliers in the marketplace. The alternatives are drying up. Still, although a lack of competition could let IBM and Oracle raise their maintenance fees (as SAP did in 2008, sparking a user revolt), where they make much of their income, Teter hasnt seen it happen yet. And Moore says he has not noticed his user group members airing fears of vendor lock-in in middleware because of IBM and Oracle moves: I dont hear people talking about that. Consolidation can boost integration Having large vendors piece together technologies from acquired companies does present the advantage of an integrated suite, says Forrester Research analyst Randy Heffner. IBM and Oracle can compete on the depth of integration and internal cohesiveness of their platforms, he adds. The value proposition is Its better for me to stick with a single-vendor platform rather than having to do the integration myself, Heffner says. But users can still mix and match, he notes; for example, an IT shop can use IBM Tivoli products to do SOA management for Oracle software. That wont become a nonoption, Heffner says. And even when a buyer gets technology from multiple vendors, there could still be lock-in, Heffner points out: If Im buying all these things from different vendors, Im just as locked in to those individual vendors as to Oracle and IBM. IT shops like increased integration, say both IDCs Fleming and JPLs Teter. User organizations are interested in standardizing and consolidating on an entire integration portfolio and perhaps also on an application portfolio, Fleming notes, which means that IBM and Oracle have to make sure there are no product gaps. And Teter agrees that singlevendor platforms can offer integration benefits, so users can avoid the trauma of stitching together individual products. Still, although he understands that both Oracle and IBM rely on strategies of acquisition, Teter laments a lack of organically developed innovation: Theres definitely not enough of that now. And what happens when theres nothing left to acquire?
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2014-01-27