|
 Part
I of IV
Read Part II
Vendor Consolidation
≠ Market Expansion
The
Blueberry Pie Is Smaller Than You Think
Summing
Up The Sums
Consolidation Expedites Natural Selection
A Market Split Into Many
Boutiques
The
Gravitation Towards EAI Muddies The Waters
Service/Maintenance vs. Product Revenues
Read the original,
April 20, 2005
"Mega Consolidation in Host Access & Web-to-Host Article"
Read
about SEAGULL's acquisition of Oak
Grove on June 13th, 2005
by
Anura Guruge
editor at
large, IT In-Depth
Vendor Consolidation ≠ Market Expansion
April 18th’s very unexpected, but symbiotic
merging of WRQ and Attachmate, as well as the less
dramatic, but very astute acquisition of
SofTouch by SEAGULL, galvanized what had been
a lackluster, stagnating marketplace. With 3 of the big names
involved, two extremely well known (and liked), this was obviously
major news. But it would be remiss to forget that $15M NEON
acquired ClientSoft (another market favorite) in mid-December
last year, while in January the $500M Software AG (that
specializes in application modernization) snapped up the
little-known, but influential, Israel-based Sabratec – with
its proven and versatile host integration technology.
So we have now had considerable and genuinely
meaningful vendor consolidation commensurate with the maturity and
the dynamics of this 24 year old market (kicked off in
1982 with
Frank Pitts creation of
Attachmate).
But this vendor consolidation does not in any
way affect or impact actual market demand.
The pie (which we will henceforth refer to as the
blueberry pie
to highlight its “blue” content) is still the same. It just means
that there is now less folks vying for a piece of it. Yes, this
means that you might be able to get bigger slices – but the pie is
still the pie. We should never lose sight of this.
The Blueberry Pie Is Smaller Than You Think
The inquisitive amongst you are by now anxious
for confirmation as to how big this pie really is. Well many of you
are going to be disappointed. I am sorry.
I can tell you for a fact that it is NOT in
the $1B range. Not even close.
You can only get $1B if you put together the
blueberry pie (representing the conventional host access/Web-to-host
market) with a lemon meringue pie (denoting the as yet fluffy EAI
market). q.v. diagram above.
This $1B Web-to-host market potential, floated
between 1997 – 1999 by the ‘Incorrect Data Corporation’, was always
highly optimistic – and then a total fantasy after the market
downturn that followed 9/11.
Summing Up The Sums
You can do the
sums yourself. Add up the revenues for
IBM (PComm and
HIS revenues), WRQ, Attachmate,
NetManage, SEAGULL, Jacada and
NEON/Clientosft.
I will even help you. Use $48M, $24M and $20M,
respectively, for NetManage, SEAGULL and Jacada. These are based on
real reported numbers. NEON was at $15M prior to CS … and lets give
them the benefit of the doubt and say that the two companies will do
$55M in 2005. That per my calculator is $147M.
I will give
WRQ $90M because, I for one, think that is as close as they
got to the $100M that they coyly allude to. And even that
may be a tad generous on my part (but that, alas, is my wont).
So by my crib sheet,
IBM
(PComm/HIS), Attachmate & WRQ have a total of $250M. I can
stretch that to even $270M since it will prove my case even
better. $270M + $147M = $417M.
So the 7 biggest players between them account,
at best, for $417M.
Then we have all the 2nd and 3rd tier players
that include: Zephyr,
Farabi, Hummingbird, SCORT,
OpenConnect, ICOM, and MochaSoft. I can be generous (yet
again) and say that we can allocate $120M across all these players.
Note we are still not even at $600M.
This is not shabby. It is not a bad market.
It is just not as big as people hoped and talked about. A case of
the eye being bigger than the pie.
Consolidation Expedites Natural Selection
Vendor consolidation is good for the market in
two ways:
1. it culls weak products
and gets them out of the way, and
2. it gives better reach to
good products that previously didn’t get adequate exposure.
The Renex products, now SEAGULL’s
BlueZone, is a good example of the latter in action. I am
hoping that the same becomes true of SofTouch’s
CrossPlex. So, in my books, SEAGULL, in the last few
years have made 3 very slick and savvy deals – where the 3rd
involved ResQNet (but I won’t go into the details here to
spare them the blushes).
The WRQ/Attachmate
‘merger’, as I have already mentioned, should result in some product
culling with Synapta an obvious choice, and EXTRA!
(now long in the tooth) an unfortunate casualty. Interestingly, the
NEON/ClientSoft
pairing has not resulted, as yet, in any product withdrawals though
there were some intriguing overlap in the mainframe-resident
offerings. But both ServiceBuilder and ClientBuilder
still live, albeit with the former now masquerading as Shadow
z/Components. [This is the 3rd name for this product which used
to be known as TanitObjects prior to Tanit being acquired by
ClientSoft in 2002.]
A Market Split Into Many Boutiques
Though most
like to think of WRQ/Attachmate, IBM, SEAGULL/SofTouch, Jacada,
NetManage,
NEON/ClientSoft,
IONA et
al. addressing a single, homogeneous, so called “legacy access”
market, this, in reality, is far from the case. This market has
many self-contained segments, with a variety of overlapping names,
as I have shown in the diagram at the start of this article.
It is hard to believe but I have tried to
simplify this as much as possible! One could carve this up further,
very quickly, into ActiveX and Java,
screen-scraping vs. adapters, autoGUI
capabilities, 2 tier vs. 3-tier, and even mainframe-residency
of the ‘gateway’. But lets keep it simple to begin with, because it
is also true that the sectors in the middle of this market [e.g.
host publishing] have not got the attention they deserved – and are
now likely to get left behind.
The Gravitation Towards EAI Muddies The Waters
The future of
this market is in the EAI sector. WRQ, SEAGULL, Jacada,
NEON,
Iona etc. know that. But this EAI sector, by definition,
encompasses much more than traditional legacy applications. So this
confuses market size and market opportunity. Plus, we need to now
factor in another name, not usually mentioned in this arena – that
being iWays the $50M Information Builder spin-off (with whom WRQ,
ever the opportunist, already has a non-exclusive partnership with).
Suffice to say at this juncture that the EAI
space has many other players, and technologies [e.g. message
queuing], than those associated with host access/Web-to-host. So we
need to be careful when we try to extrapolate now aging host
access/Web-to-host market into the EAI space. More on that later,
once we have nailed down where we are at in the conventional host
space [i.e. the blueberry pie] – not counting EIA [i.e. the span
from fat client to host integration].
This sector has been sluggish, since 2000,
with no real growth that is worth crowing about.
All the
results that we see, from the few public companies operating in this
space [e.g. SEAGULL, NetManage,
NEON,
Jacada], confirm this. Growth is sporadic and at best modest. It
is true that one can contend that we never see the real picture
since the largest players in this space; i.e.
IBM, WRQ,
Attachmate, ClientSoft, do not publicize their numbers (which in the
case of IBM means is that they do not explicitly spell out their
PComm and HIS revenues). But the trends are inescapable.
Service/Maintenance vs. Product Revenues
Service and maintenance represent close to 50%
of the revenues being generated in host access/Web-to-host. I don’t
think we are seeing an increase in the number of ‘seats’ involved.
If anything the seat count for fat clients has to be declining with
job layoffs – if nothing else. Increases in overall users, due to
Web and portal access [e.g. self-service portals], are always via
thin-clients, host-to-HTML or host integration. Any spurts of
activity are precipitated by the expirations of maintenance
contracts. At that juncture the customer is looking to beat down
the prices being quoted by the incumbent while competitors descend
with enticing offers.
Thin-client, though so cost-effective and
powerful, has not prevailed to the extent it deserves. Migration
options from fat-clients to thin [e.g. keyboard/color mappings,
macros and APIs] were sporadic with Attachmate, for one, being
extremely lax. It is amusing to hear the likes of Zephyr and
NetManage offering better migration options for EXTRA! customers
than those available from Attachmate. Attachmate, as I said in my
initial analysis, has now paid the ultimate price for such
delinquency.
Host publishing, another extremely useful
technology, has also disappointed, in the main – mainly because
there was no real leadership. Yes, there are some spectacular
examples of this technology (and I have at least 30 actual case
studies studded with tantalizing screen shots, many from the likes
of Farabi, iE and my favorite, featuring, Bentley Motors, from
NetManage).
Host publishing will now be subsumed into host
integration – which in turn has become a small subset of EAI.
So lets leave it here for the time being.
I will cover EAI and adapters in Part II.
If YOU are the
Big Iron Club member (of good
standing) and would like more detailed, customized, analysis, data
or comments drop me an e-mail. I have enough data, documents and
pictures to sink a barge. |
