In-Depth

BEA at the crossroads

• By Michael W. Bucken
• August 1, 2002

Success in the software business isn't easy to come by. For every supplier that lasts 10 years and/or hits the $1 billion annual sales mark there are a hundred or more that are lucky to survive a year or two.

Some -- like Powersoft, Gupta, Informix, RTI/Ingres and so on -- found wild success with a first generation of products, but fell quickly by failing to repeat their success. Others, like Mercury Interactive, Lotus and BMC have successfully repeated their first-generation success, but must now work to create a new generation.

From this seat, it's always interesting to watch the strategies successful first-generation companies use to get to the so-called ''next level.'' Right now, all eyes are on BEA Systems Inc., which shot to the head of the application server track on the back of good technology, a brilliant marketing strategy, terrific execution, the bumbling of some competitors (read Sun and its inability to fuse together a strategy for its multiple application servers), and the inability of smaller companies like Bluestone, SilverStream and others to get away from the pack. Today, BEA and IBM are the primary application server builders, and Sun and Oracle are playing lesser roles.

In this issue, Editor-at-Large Jack Vaughan takes a close look at BEA's strategy (see 'What's behind BEA's big bet on tools?') to expand into the development tool business with technology developed by former Microsoft development gurus. Vaughan steps back to tell how BEA surged beyond its Tuxedo transaction processing roots with the acquisition and positioning of the WebLogic technology, which propelled annual sales to nearly $1 billion last year.

As Vaughan notes, BEA's next steps are fraught with peril. Can sales of its new products make up for any slowdown in the maturing application server business? Can a management team sitting comfortably on top of one world move aggressively into a new one and repeat its earlier success? Can the firm continue to avoid being crushed by industry giants Microsoft and IBM, as well as continue to count on missteps by other large firms?

Analysts' opinions are mixed, competitors say they see a firm ripe for the taking, while users remain concerned about the future of all their vendors. But so far, at least, BEA has earned the benefit of the doubt. Clearly, executives have learned from earlier mistakes like WebGain, and know the firm can't survive on past laurels. We'll keep watching with interest and reporting to you what we find out.