EXcelon, a company in one of the hottest market segments ? XML-based middleware and Web services infrastructure ? is currently undergoing restructuring, a move that will involve cutting a quarter of its workforce, or about 100 staff. And this week the Burlington, Massachusetts-based company lowered its revenue expectations for the fourth quarter to a range of $13.6m-14.1m, compared to the $16m-17m it had originally forecast. Final figures will be released February 13.
However, despite its current problems, eXcelon is starting to look in good shape for next year. With a rationalized cost structure, it is forecasting a return to profitability in the second quarter of 2002, and CEO Joe Bellini predicts that its XML business will take off rapidly in the second half of next year. Reversing a move made last year, the streamlining involves the combination of the company's Object Design data management, XML B2B tools and consultancy operations "into one competitive business," he told analysts.
Context: Object Design was selling its ObjectStore database to telecommunications and finance companies for 10 years before it introduced its first XML tools in 1999. The following year, it changed its name to eXcelon, a move that looked to many like the end for the ObjectStore technology. That turned out not to be the case. In the most recent quarter, ObjectStore still accounted for half of the company's software license revenue, even though software revenues derived from it decreased by 42% during the first nine months of 2001, partly because of the downturn in the telecom industry.
Last year, the company expanded its services business with the acquisition of C-Bridge Internet Solutions. Now it's shifting the focus of its sales force to concentrate on higher-margin software products. Services are still expected to account for about $5m in revenue in the first quarter of next year, compared to $3.2m in maintenance and $5.8m in software licenses. But sales reps will no longer be trying to sell services that aren't specifically related to eXcelon software products.
Products: Essentially, what eXcelon is attempting to do is simplify its product line. "We had too many products given the size of the company," says Bellini. "The sales team was spread too thin." The pitch now is that the XML products are complementary to ObjectStore. EXcelon says it's in the business of providing real-time distributed architectures for Web services. Its object technology, using the C++ interface favored by systems engineers, has been tackling that sort of problem for 12 years.
Now, it says, the choice has been extended to Java and XML interfaces through its XIS eXtensible Information Server product line, Stylus XML development tools and Javlin accelerator for J2EE. The move extends eXcelon's target beyond the relatively small base of systems engineers to the wider set of corporate developers who want to use Java and XML. It also anticipates that its technology will often be deployed on Linux-based hardware, offering huge savings for users. ObjectStore already runs on Linux, while XIS is scheduled to make the move within six months.
Technology roadmap: With ObjectStore positioned as the foundation product for XML-based Web services, used where a high-performance, zero-latency architecture is required, eXcelon hopes to revitalize sales of its core product line. But it also has its eye on renewed ObjectStore business from telecom companies once the economy turns. Using the current OSSJ and the proposed next-generation NGOSS (New Generation Operations Systems and Software) programs, defined by the TeleManagement Forum, carriers are looking to extend their existing data networks to support Java and XML.
With its XML platform and tools, eXcelon claims to be something like two years ahead of its rivals, because it was one of the earliest to integrate a business process management (BPM) engine into an XML native database. Now all the major players are looking to use BPM as the central "pump" for Web services, says Bellini. "So we've already made changes to our database to accommodate the BPM products that we know are coming." EXcelon claims to be the only vendor to have fully implemented the ebXML specifications.
Javlin is one eXcelon product that has yet to take off. It uses caching techniques to accelerate the performance of J2EE, and is used in conjunction with application servers from BEA and others. But it's likely to become more significant once larger-scale J2EE applications move into deployment, perhaps running across four or more servers.
Competition: Hoping to avoid competition with what it calls "the scale players" (meaning HP, Microsoft, Oracle and Sun) eXcelon says it's working extensively with those companies to make sure its products fit into their Web Services architectures ? because it's those companies that will ultimately define the architectures. Otherwise, its competition comes from other XML native database specialists, such as market leader Software AG, and other long-established object companies moving into XML, such as Iona. An emerging generation of Web services-based network application integrators ? Asera being an example ? may also overlap in some areas.
Conclusion: Over its 12-year history, eXcelon has been forced to reinvent itself more than once. But it shouldn't be dismissed. With its solid expertise in object technology as underpinnings, it's now assembled an impressive set of products in an area that, even in the current depressed environment, is forecast to grow at a rate of 80% per annum over the next few years. With its rationalized cost structure, the company has a good chance of prospering.
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