Open-source software has already shaken up the operating systems business. Now, Java server software makers are feeling the heat.
Analysts say it's difficult to measure the extent to which open-source Java application servers, such as Tomcat and JBoss, have eaten into the revenue of commercial providers of Java application servers. But the growing popularity of the open-source application servers is undeniable.
"There are clearly situations where companies are making bets on open-source products to save a lot of money," said Forrester Research analyst Ted Schadler, citing companies such as search giant Google and office equipment supplier Corporate Express. "The issue is not so much the quality of the technology, but the quality of the service and support."
Adoption of open-source application servers appears to be mirroring the grassroots support that propelled Linux into corporations. Programmers often develop and test customised business applications using open-source tools and then run them on commercial or open-source Java application servers and databases.
Open source has yet to significantly penetrate the entrenched positions of powerful companies such as BEA Systems, IBM and Oracle. But the growing popularity of open-source alternatives, coupled with products becoming commodities and a prolonged IT budget squeeze, are threatening to reshape the application server software market.
Java-based application servers have become a mainstay of corporate IT infrastructures, giving businesses tools and a deployment platform for building and running customized applications. An entire industry has sprung up around the Java 2 Enterprise Edition (J2EE) standard, which lets businesses move an application from one Java application server to another with little modification.
Application servers and associated tools continue to represent a multibillion-dollar market. But after years of healthy growth, Java server software providers last year battled with open-source alternatives--and in some cases, Microsoft--for a share of a shrinking pie.
Market researcher IDC found that revenue for application development and "deployment" shrunk by nearly four percent from 2001 to 2002. Numbers for the "application deployment platform," which encompasses the Java application server without add-on products, showed a nearly nine percent dip in revenue during 2002, according to IDC.
"It's a case of commoditisation and consolidation," IDC analyst Michele Rosen said. "Once everyone settled on J2EE, given the complexity of it, it's difficult to show value, based solely on the core app server."
Hewlett-Packard, for example, was forced to exit the Java application server market last year after failing to gain ground on leaders IBM and BEA, which together control the majority of market revenue.
Last year also saw freely available open-source application servers such as Tomcat and JBoss increasingly make their mark. While Tomcat is appropriate for less complex applications that serve up Web pages to PCs, JBoss is attracting increasing attention because of its completeness and compatibility with the J2EE specification.
The JBoss Group, a company founded in 1999 that offers services for JBoss software, can point to large corporations, such as telecom giant WorldCom and integration software provider WebMethods, which have decided to use JBoss for demanding computing tasks.
JBoss appears to be popular with programmers--there were two million downloads of its product last year. Now, JBoss Group is set on convincing corporate customers that open-source application servers can fit in the corporate IT product mix, much like Linux increasingly does.
"It's already a development standard," said Marc Fleury, founder and president of JBoss Group. "The challenge is to transform JBoss--like (Microsoft's) .Net--into a production standard. That's our ambition."
Applications written for commercial Java application servers such as BEA's WebLogic can be modified to run on JBoss software within two or three days, said Fleury, who left Sun Microsystems to write J2EE-compatible software independent of Sun, which controls the Java specification. JBoss had been trying to gain Sun-sanctioned J2EE compliance certification but has essentially dropped that effort.
"Sun has been stonewalling us. Do they really want to acknowledge that a compliant server is free?" Fleury said.
The popularity of open-source application servers is just another force pushing providers of Java application servers to offer simpler, cheaper versions of their software. For many applications, businesses need only a relatively simple server to deliver Web pages to customers, obviating the need to invest in more robust--and expensive--features.
Both BEA and IBM have "express versions" of their respective Java application servers aimed at smaller departments within large organisations or medium-sized businesses. These stripped-down products, which have a simpler installation and configuration process, cost several hundred dollars to a few thousand dollars, compared with more complex versions of application servers that can cost tens or hundreds of thousands of dollars.
Java creator Sun decided last year to bundle its Java server with its Solaris operating system as well as with Windows and Linux for free, in an effort to make J2EE more pervasive, according to the company.
The trend toward J2EE application servers increasing becoming a commodity has prompted the emergence of what market researcher Gartner calls "application platform suites." These suites are a bundle of applications that run in conjunction with a Java application server and include specialised integration software and corporate portals, which present corporate information through a browser.
IBM, BEA, Oracle, Sybase and others have built out their Java wares with these add-ons in an effort to garner more revenue from existing customers. Other add-ons include mobile and collaborative capabilities and a network directory.
"It's an inevitable evolution to go from the fragmented mess that there's been for the last few years to a platform designed for all the pieces to work together," said John Magee, vice president of marketing for Oracle's Oracle9i Application Server. "It reduces the cost of development applications and maintaining them."
Indeed, application suites and more capable application servers will remain in strong demand for the coming years, according to analysts. IDC, for example, is forecasting about three percent growth in revenue this year for the application server category.
Companies such as IBM and BEA continue to count on higher-end features, such as clustering and the latest standards compliance, to attract customers. Open-source companies also have yet to show that they can provide the services required to support a large number of customers.
"Open source is good at simpler technology...But when you have big chunks of changes like Web services and security and administration going on with the application server--something that complex--we think it will be a few years before open source catches up," said Frazier Miller, director of product strategy at BEA.
Meanwhile, longtime Java foe Microsoft is also plotting to make life uncomfortable for Java server software providers. With the planned release of Windows Server 2003 at the end of April, Microsoft can claim to have its own application server embedded within the operating system.
By compressing more features, such as transactional and integration software, into Windows, Microsoft is effectively giving away typical middleware features found in Java application servers with its operating system, according to Microsoft executives.
"At some point, that chunk of middleware is not a market. Those companies can't make money on it anymore," said John Montgomery, group product manager for Microsoft's .Net developer platform.
Microsoft also continues to wield its development tools as a competitive weapon. The productivity that programmers gain by using Microsoft's .Net development tools is usually a more important customer consideration than price, according to Microsoft executives.
BEA and IBM, which control the majority of Java application server revenue, have both ratcheted up efforts to build developer loyalty.
Last year, BEA created its WebLogic Workshop, a programming application designed to address the difficulty of writing applications with Java and J2EE--a long-standing complaint. IBM demonstrated its growing focus on developers last year with the launch of a Java-based open-source tools initiative called Eclipse and with its acquisition of Rational Software.
Sybase, which IDC's Rosen said "is on the borderline of those players that can still make a go of it and gain market share," plans to launch a series of productivity tools for its EAServer. The tools are designed to lower the ongoing operating costs of Web applications, according to Sybase.
In the long term, Gartner analyst Yafim Natis sees growing demand for application servers but a decided split in how they are developed and packaged.
Basic application servers will be free or nearly free and will be included in other products, from Microsoft's operating system to SAP's R/3 enterprise application suite.
More specialised application servers will also emerge, Natis predicts. He sees a need for server software whose main task is presenting database information to a variety of handheld devices, as well as for more high-end applications to handle mainly transactions and machine-to-machine data exchange.
For the coming year, analysts project that the same server software companies will continue to duke it out in a persistently tight economic environment.
"There are no new players--the existing companies are just competing for share of wallet now," Forrester's Schadler said. "So the battle shifts to be about completeness, the cohesion of the products, the quality of the tools, price, third-party company support and developer skills. It becomes a brand war."