Continued Consolidation in the
Host Access/Web-to-host space

by Anura Guruge,
the editor at large for IT In-Depth

Rejoice!

This mega consolidation, coming on the heals of NEON’s acquisition of ClientSoft, is very good news for the host access/Web-to-host market, though it grieves me that there will be job losses – in particular at Attachmate and WRQ.

Both of these are, indubitably, inspired pairings.

SEAGULL and SofTouch is synergistic.

WRQ/Attachmate is symbiotic.

The market, so fragmented, will, in time, benefit from the inevitable product shakeout that will now transpire.  This is the best thing that has happened to the long suffering Attachmate user base in a very long time.  Rather than struggling to comprehend Synapta, which was but a re-branding of two older products, they can start looking at Verastream – arguably the most powerful product of its ilk, though with a reputation of being awkward.

I tip my hat to SEAGULL.

CrossPlex, at a stroke, gives it a whole new lease of life at a time when its future was looking distinctly unpromising.  The mainframe prowess of CrossPlex, in addition, ensure that SEAGULL will now not be unduly buffeted by the WRQ/Attachmate merger.  With CrossPlex, SEAGULL has a compelling story for its installed base and prospective customers.

Resurfacing the Playing Field

WRQ/Attachmate, with close to $200M in revenues and around 17 million user ‘seats’, is now the new superpower in this sector, even ahead of IBM – though I would be remiss if I did not note that in 1994 when Attachmate merged with DCA (the creator of the seminal IRMA card for PCs) the combined revenues of those two companies were $400M.  Over the next decade Attachmate managed to lose nearly 80% of that.  That was somewhat careless.

The combined WRQ/Attachmate is supposed to have 16% market share (though no body is specific as to what this ‘market is’).  WRQ/Attachmate are major players in 4 distinct markets:

    1. IBM (where they were #2 and #3)

    2. PC-X (where both are in the top 5)

    3. HP (which WRQ owns)

    4. Unisys (which Attachmate owns)

If we look at the IBM market alone, I think that IBM, WRQ and Attachmate, together, have to own more than half the market.  So this pairing is a big deal.

So is NEON/ClienSoft.  So we now have three super-size players, not counting IBM: WRQ/Attachmate, NEON/ClientSoft and SEAGULL/SofTouch.  Ironically, I do not think that this consolidation really impacts IBM.  IBM, in essence, works on a different plane and to be honest has not paid much attention to the host access/Web-to-host market in the last few years.  It has bigger fish to fry.  This realignment is not good news for Jacada and NetManage in particular.  It also, interestingly, puts a premium on Atunity – that odd player in the adapter business.  Maybe it is time that these three Israeli companies merged.  Then there is the likes of IONA.  A WRQ/Attachmate/IONA axis could really tilt the balance.

Winners & Losers: Products and People

Attachmate founded in 1982 by Frank Pritt (see Blog) is the oldest player in the IBM host access market.  WRQ, that tentatively entered the IBM space in 1996 with Reflection, is one of the newest.  They are neighbors and since 1996 WRQ’s relentless goal was to outdo Attachmate.  And to be honest it did.  Last year it definitely shot past Attachmate.  Though couched as a merger this will transpire to be a takeover.

Attachmate has a larger installed base, unparalleled name recognition, more feet on the streets, and lots of loyalty.  WRQ has chutzpah, detail-oriented engineers and the most relentless marketing organization in the industry.

WRQ’s marketing is aggressive and arrogant.  Attachmate’s is just inept – and Attachmate has now paid the ultimate price for that.

They both have exceptional engineering talent.  Probably the best in the industry.  Hopefully they can make resounding music together.  It would be a shame to see any of this talent let go.

Ditto for much of Attachmate’s field personnel and consultants.  WRQ, at a stroke, has inherited, what I reckon, is one of the best field organizations in this sector.

EXTRA!, though one of the best known brands in the IBM world, is getting long in the tooth and Attachmate has been remiss in providing compelling migration paths for ‘thin-client’ solutions.  Reflection is slick.  If I was making the call, Reflection will prevail over EXTRA!

You do not even have to make a call with Synapta.  Synapta was flaccid from day one.  It was but the rebranding of EXTRA! Smart Connectors (from 11/2001) and EXTRA! Presentation Builder (from 2002).  Verastream, with its huge repertoire of backends and ‘on-the-fly’ host publishing, can run circles around it.  However, I doubt whether they will can Synapta right away.  Presentation Builder has a following and its ‘lets create a Java app. first’ approach does have some merit – which WRQ’s marketing might be able to exploit.

Things are much easier on the SEAGULL/SofTouch front.  There is really no product overlaps.  Hence the synergy.  To succeed they have to now push CrossPlex as hard as they can … against NEON/ClientSoft and IONA.  Though Attachmate does have mainframe-resident CICS and IMS adapters, WRQ/Attachmate are unlikely to compete that heavily on the mainframe-centric server solutions.  Mainframe-resident solutions is not in WRQ’s comfort zone.  Thus to an extent demarcation lines are already appearing across the market.

WRQ/Attachmate would like to dominate the traditional host access and the non-mainframe resident Web-to-host sectors.  NEON/ClientSoft and SEAGULL/SofTouch thus have the mainframe resident sector – albeit with competition from the likes of IONA.

The bottom line here is that both these pairings make a lot of sense.  WRQ and SEAGULL have done good.  Savvy Attachmate customers are no doubt relieved.  Host access, most likely, has now entered its final cycle of its 25 year life-span.  The next step is host integration in the context of EAI.

<<CrossPlex logo still belongs to SofTouch.  WRQ Verastream's is WRQ's while Synapta belongs to Attachmate. >>

► Read Part I of the Battle Royal for Legacy Capital

► Read Part II of the Battle Royal for Legacy Capital

► Read about SEAGULL's acquisition of Oak Grove on June 13th, 2005