Eric Stahl's Blog
Eric Stahl's Blog
Eric Stahl is Senior Director of Investor Relations at BEA. After joining the company in 1999 he spent his first five years focused on the development of the application server market and drove the marketing plan for WebLogic Server.
Eric is currently in Investor Relations, helping communicate BEA's strategy, products and performance to the financial analyst community. Prior to BEA Eric was at Informix Software, focusing on the database and development tools markets.
Dissecting Oracle's Growth Claims
Oracle recently issued a press release, claiming to be "growing faster than BEA", with middleware licenses increasing 24% last quarter, compared to BEA's 18%. Before taking this claim at face value, consider the following.
1. The way Oracle breaks out their revenue numbers makes it impossible to confirm or deny any of their middleware growth claims. Oracle only breaks out two lines of software licenses 1) Applications and 2) Database & Middleware. Revenues can get shuffled around on a fairly arbitrary basis. For example, when a customer signs an ELA, how do they assign revenues to each product? Some wonder if a disproportionate amount is allocated to where ever they want to show growth. Oracle used to criticize IBM for playing this game.
2. Their reported middleware growth rate includes an unknown amount of legacy and other products that BEA does not compete for. To make a reasonable comparison to BEA you would need to remove Oracle Forms, their Business Intelligence products (i.e. Siebel Analytics + Oracle Business Intelligence Suite), their security products (Oblix), data hubs and other miscellaneous products from Siebel, Peoplesoft and other acquisitions that are in product spaces that BEA does not compete for. This in itself should reduce their 24% growth rate well below BEA's.
3. Market share is an aggregate of install base and new customers. BEA has been amassing significantly more middleware customers than Oracle over the last ten years. Even if you doubled Oracle's middleware revenues it would take them years to catch up to the size of BEA's install base/market share.
Wall Street, who tracks these numbers closely, doesn't seem to buy their story either.
At the end of the day Oracle is blurring the lines to try to make it look like their current application server, integration, portal and SOA products are doing better than they really are.
The SOA Platform Battle: BEA vs. IBM
The battle for the SOA platform is well underway. Today IBM announced a variety of new SOA products and services. For those of you keeping score, here are a few points to keep in mind.
The Performance Benchmarks Tell an Interesting Story
Performance and scale are core to any infrastructure platform, especially when using XML and Web services.
At this point it looks like IBM has conceded the SPECjAppServer2004 benchmarks to BEA. BEA currently owns the top three throughput results and has shown that WebLogic can process the same number of transactions on half the hardware as WebSphere. IBM hasn't published a benchmark since October 2005.
A summary of the performance benchmark results can be seen here.
The Product Reviews Tell an Interesting Story
Network Computing did a detailed Enterprise Service Bus product review in March 2006. The ESB is generally considered to be core to SOA. IBM's ESB came in 6th out of 8 products reviewed. BEA's AquaLogic Service Bus, which was launched in July of 2005, took 1st place. The full details can be seen here.
Network Computing also did a BPM product review in July of 2005. Fuego, which is now AquaLogic BPM, took first place. IBM did not compete. The details can be seen here.
IBM's Q4 Financial Results Tell an Interesting Story
IBM published their Q4 results on January 17th. IBM Software grew 0% in Q4. The WebSphere family grew 4%. Lotus grew 2%. Tivoli grew 3%. Rational was negative 2%.
This chart is from their earnings call, available on ibm.com.
These numbers include license and maintenance revenues. While it's not possible to get an exact license number for each product family, it is important to realize that maintenance represents a significant portion of any revenue number because it is an aggregate of new and install base customers paying the annual fee. For this reason it is safe to assume that WebSphere and other key branded license revenues are shrinking, not "gaining share" as they say.
BEA reported Q4 earnings on February 23rd.
*For the fiscal year, revenue was a record $1.2 billion, up 11% from last year.
*For the quarter, total revenue was a record $341 million.
*For the quarter, license revenues were up 18% year/year. To compare this number to the IBM numbers you need to add maintenance revenues back in, which makes the growth rate significantly higher.
*BEA had a record of 31 deals over $1M.
*Cash Flow from operations was over $100M for the first time.
A big reason for this financial performance is because of AquaLogic, BEA's platform for SOA. In Q4 BEA reported that AquaLogic represented 10% of license revenues, which surprised many people for a brand launched in June of 2005.
The product family is made up of internally developed products such as the Service Bus, the Data Services Platform and Enterprise Security as well as the recently acquired products from Plumtree and Fuego.
For a longer range view of BEA's financial performance, see this blog entry.
The Stock Chart Tells an Interesting Story
Wall Street is also voting with their dollars. The chart below is a trailing 12 month view of BEA and IBM stock prices, which reflect the perception of performance and potential of each company.
Replay of BEA Financial Analyst Day Now Available
On March 21st BEA hosted the sixth annual Financial Analyst Day featuring presentations by Chairman, Founder and CEO Alfred Chuang, Chief Marketing Officer Marge Breya, President of World Wide Field Operations Tom Ashburn, Senior Vice President of Americas Sales Rich Geraffo and Chief Financial Officer Mark Dentinger. The day covered BEA's product and go-to-market strategies as well as customer presentations by Verizon Wireless, Visage Mobile and Pratt & Whitney.
The audio and slides are available at bea.com/investor. We have also posted the AquaLogic, WebLogic Platform and WebLogic Communications Platform presentations that were delivered the following day.
I realize that this isn't typical dev2dev technical content, but figure that some of you are interested in BEA's business strategy.
Analysis of Application Server Benchmark Results as of March 2006
There were two new SPECjAppServer2004 publications since my last recap of the results. These were mid range configurations run by HP.
The first used WebLogic Server 9.1, JRockit 5, RedHat Enterprise Linux 4 Update 2 running a single application server with four Itanium2 processors. The database was Oracle Database 10g Enterprise Edition Release 10.1.0.4 running on HP-UX 11i with four Itanium2 processors. This configuration processed 542.17 SPECjAppServer2004 JOPS@Standard. The full configuration details can be seen here.
The second configuration used BEA WebLogic Server 9.0, HP's VM, HP-UX rx4640 running a single application server with four Itanium2 processors. The database was Oracle Database 10g Enterprise Edition Release 10.1.0.4 running on HP-UX 11i with four Itanium2 processors. This configuration processed 538.03 SPECjAppServer2004 JOPS@Standard. The full configuration details can be seen here.
HP ran a similar configuration in September of 2005, using WebLogic Server 9, HP-UX, Oracle and Itanium2 processors but only got 471.28 SPECjAppServer2004 JOPS@Standard. The new results are about 14% better.
We now have a total of 19 configurations to compare. Ten are running WebLogic Server, including the top three scores, which are published on a diverse set of hardware, OS and VMs.
Five use WebSphere but IBM hasn't published a score since October, 2005. Four use Sun Java System Application Server. Still no results from Oracle or JBoss, almost two years after the first SPECjAppSever2004 score was published.
All of the results can be see here.
SPECjAppServer is a trademark of the Standard Performance Evaluation Corp. (SPEC). Competitive numbers shown reflect results published on www.spec.org as of March 13th, 2006.
Network Computing ESB Product Review
Network Computing just published a technical primer and lab based product review of ESBs, seen here.
They do a nice job of explaining the role of the ESB and their test methodology as they look at products from BEA Systems, Cape Clear Software, Fiorano Software, IBM, Oracle, Software AG, Sonic Software and TIBCO Software.
If you want to cut to the chase, you can skip ahead to the final Report Card.