Sun has been talking in recent weeks of the large cost of BEA's WebLogic application server, asking rhetorically why a customer would want to pay about $80,000 for what it calls a "single feature." In doing so it has been trying to draw a clear distinction between WebLogic and its own Sun One J2EE application server, referring to the former as a "gold-plated Rolls Royce" and the latter as "a Toyota truck." Now we know why.
The pair have announced that starting January 2003, Sun will bundle an evaluation copy of BEA WebLogic with Sun's Solaris 9 operating system. Despite being founded by a trio of ex-Sun executives, the two firms have never had a formal distribution agreement for WebLogic, although they have worked together extensively in the field and are partners for other products, such as portals. Still, this is a significant move for both firms, if for no other reason than for what it says about the balance of power in the software infrastructure market right now.
Sun's strategy: Despite the lack of a previous deal, BEA and Sun have always had a reasonably good relationship, because of common enemies as well as interests. That BEA's founders came from Sun helps, but a more important reason they get along is BEA's success, albeit arguable, in defining the Java application server market and thus being one of the principal drivers in establishing J2EE as an enterprise software platform. And as the majority of WebLogic's implementations have always run on Solaris, BEA has helped Sun sell more hardware – which is why this deal can be seen as merely a confirmation of the status quo.
The nature of their cooperative/competitive relationship was demonstrated at May's announcement of Solaris 9, when BEA stood shoulder to shoulder with Sun, saying what a good thing it was. That was despite Sun's announcement at the time that it would embed its own Sun One J2EE application server into Solaris, thus claiming a swath of the low end of the market for itself.
In trying to carve out a niche for itself as the supplier of low-end J2EE application servers, Sun will see itself competing mainly against Oracle, which is generally thought to be third in terms of market share behind IBM and BEA, the clear leaders, but ahead of Sun by a few percentage points. However, the most recent figures were assembled prior to the bundling of the Sun One application server with Solaris.
Combining the Solaris franchise, its hardware business and the fact that it is basically giving the application server away, Sun should be able to compete much more effectively with Oracle. Nevertheless, if it is unable to claw back market share from Oracle, it will need to look carefully at the product. A senior Sun official recently referred to the company's application server as having gone through "a rough couple of years," but Sun believes that its new software focus under the guidance of Jonathan Schwartz should help reverse this trend.
BEA's strategy: But it's not a one-way relationship: BEA needs Sun – and its other significant hardware partner, Hewlett-Packard – as much as they need it, mainly to combat the threat of IBM and its integratable stack of hardware, services and WebSphere software. That need was heightened with IBM's agreement to acquire Rational Software, one of BEA's key third-party development tools.
If Borland, BEA's main development tools partner, gets bought, as unsubstantiated rumors suggest it might, it will be left with no major third-party development partner – its other partners being AltoWeb, Bowstreet, Sun, TogetherSoft and Versata. Borland's acquisition of TogetherSoft is expected to close in January 2003. Meanwhile, BEA is emphasizing its Borland relationship, specifically its JBuilder product, and hoping the company remains independent. Just before it was bought by IBM, Rational nixed its own relationship with Borland.
Sun's middleware: How middleware is defined depends on the vendor. For example, for IBM it includes databases. But for Sun it appears to mean a combination of portal, identity management, directories, messaging, calendars, collaboration and integration.
Sun wants to ensure that every piece of hardware that it ships contains a full version of its middleware stack, thus more effectively leveraging its hardware business to bolster its software business. Despite claiming to spend considerably more R&D funds on software than hardware, Sun is still perceived as more about hardware than software (or services, for which it has partners). Even though it is a little late in taking this more integrated approach, the bundling seems like a logical move.
Sun recently announced that it would include its Sun ONE Portal within its Sun ONE application server, which of course is already being shipped as part of Solaris 9, as is the company's directory server. Sun says this move is as much about insuring that all its hardware has a core stack of software included, as it is about Solaris specifically.
Sun's middleware is one of six current areas of focus for the software division, which is run by Jonathan Schwartz. The other five are the operating systems (both Solaris and Linux), availability (clustering and the like), N1 (Sun utility computing strategy that we recently analyzed in detail), the desktop and mobility (J2ME, Java Cards).
Competition: Sun competes and cooperates with BEA, but the real targets of both companies here are IBM, Microsoft and Oracle. All three have application server platforms of one sort or another, plus varying layers of other middleware and tools. For BEA the main competition is IBM, while Sun competes with all three. The breadth of competition is the narrowest with Oracle, which also helps it sell a lot of hardware.
Linux: We assume that in time Sun will also embed a similar middleware stack with its Sun Linux operating system, which is based on Red Hat's distribution. It has started down that path with the announcement of its Mad Hatter stack of Linux-based applications, which it is shipping both as a set of thin-client applications running off a server (code-named Tea Party) and as fat-client applications residing on desktop machines. The thin client is aimed at the call center and other similar markets, while the desktop is aimed more at the enterprise market.
the451 assessment: Solaris and WebLogic is already a widely proven combination in the field. Sun is making this move from a position of weakness, having bought or inherited companies over the years to build its own application server business – NetDynamics, Netscape (Kiva) – and failing to even make the top three. Although it might not be immediately apparent, this deal is an example of Sun starting to realize the one large advantage it has over competitors such as IBM, Microsoft and Oracle: Solaris. Building on top of its huge Solaris base – on which the majority of WebLogic instances already run – represents Sun's best chance of building a successful software business in the face of fierce competition.