A new report from Butler Group confirms what we already suspected: the big vendors are pouring out lots of cash in efforts to roll up smaller, more specialized SOA vendors into suites -- and will continue to do so.
The Big SOA vendors are being chased upstream to maintain their high-margin business
Butler says the SOA vendor base is shrinking as the big guys roll up smaller players to build their all-in-one suites. However, they also say that there is a major disruption at the low end of the market.
As the consultancy puts it: "SOA vendors need to acquire a critical mass of market share in order to sustain the ongoing development investment that will be needed, and to prosper in a market that is set to become commoditized."
Those last few words in that statement -- "set to become commoditized" -- are definitely the most eye-catching. And, if we follow that logic, it can be assumed that larger market-leading vendors will continue to be chased upstream in pursuit of high-margin business, as new entrants with commodity solutions (presumably open source) eat more and more of their lunch.
Butler says as much, indicating that the time has arrived when SOA evolves into a volume business:
"At the present time SOA vendors mainly target large enterprises, so the market is dominated by high-value, low-volume sales. Butler Group expects this will start to change within two or three years as the large enterprise market starts to become saturated. The need to address medium-sized enterprises will impact not just sales and marketing strategies, but will also have a large impact on the products themselves, with ease-of-use and reduced administration being prerequisites to mid-market success. In fact Butler Group expects some vendors will find it difficult to address the high-volume market."
Hmmm. The high-volume market is is is where Microsoft has always played well, and has eaten many a competitor's lunch. So this trend definitely favors Microsoft-based SOA over the long run.
But the growth of the SOA mass market also will fuel the growth of other players as well , who's business models are built for providing commoditized offerings at low margins, such as JBoss, MuleSource, WSO2, and ActiveBPEL, just to name a few. Stay tuned.