Prediction 2003: The AIM Market Consolidates

Transcription

1 Market Analysis Prediction 2003: The AIM Market Consolidates The application integration middleware and portal markets are crowded with major software vendors. New license revenue growth will be slower than projected and more vendor shakeout is imminent. By Joanne Correia Strategic Planning Assumptons Through 2003, market growth for all AIM products will stay in the mid-single digits because of the continued contraction of IT spending (0.7 probability). By 2006, market share for APS all-in-one products, which combine portals, application servers and integration suites into a single product offering, will represent one-third of the combined portal, application server and integration suite market segments (0.7 probability). Through 2005, portal market growth will diminish dramatically as portal features become a standard part of enterprise applications, application platforms and smart enterprise suites (0.8 probability). Publication Date: November 13, 2002

2 2 Prediction 2003: The AIM Market Consolidates Prediction: Market Inhibitors Stronger Than the Market Drivers Through 2003 Overall, the software market and buyer behavior will remain cautious and focused on the bottom line for the near future. Buyers now prefer a low-risk supplier with a "C" product to a startup vendor with what might be an "A" product. This change in buyer behavior benefits the titans, which have broad one-stop portfolios and stable balance sheets. The net effect on the application integration middleware (AIM) and portal markets is even slower growth. The AIM and portal markets are crowded, with the major software vendors fighting for market share. New license revenue growth will be slower than projected and more vendor shakeout is imminent. While the maturation and growing standardization of the software infrastructure technology has reduced the appeal of visionary, best-of-breed vendors vs. large software titans. Consolidation of the component markets into suites both in the AIM and Portal markets will result in fewer players in the enterprise application server (EAS), integrated broker suites (IBS) and portal products markets as customers continue to be more conservative because of uncertainty about the economy and best-of-breed vendors' viability. For more information on this subject, see "Consolidation Continues: Titans vs. Pure-Play Vendors" (SOFT-WW-DP-0103). Through 2003, market growth for the majority of AIM products (except for application servers and application platform suites [APS]) will stay in the mid-single digits because of the continued contraction of IT spending. (0.7 probability) Impact on 2003 Gartner Dataquest anticipates the following developments in this market during 2003: Economic issues combined with increased competition will lower averagedealsizeandcausemultistagedeployments. Mergers, acquisitions, divestiture and demise (MADD) activity will significantly intensify. Sales will be limited to projects with quantifiable return on investment (ROI) that automate and reduce staff requirements. Larger vendors will be best positioned to sustain themselves by cross-selling from their large application portfolios to their installed base new customers will be scarce.

3 Reacting to 2003 The titans of the AIM marketplace must take advantage of their strength during this time and look to partner with or acquire pure-play vendors that can fill functionality gaps in their solution offerings or bring access to new customers. They should repackage and reposition any monolithic products as multiple modules where feasible to take advantage the economic trends. Prediction: The APS Market Will Not Eliminate Stand-Alone Markets, Although They Will Consolidate Gartner Dataquest further predicts that the APS market will not eliminate the stand-alone markets of its component products, although its presence and growth will force the stand-alone markets to contract and consolidate. The APS market is new but crowded, with the major software vendors fighting for market share. This market includes portals, application servers and integration suites that are being combined into single-product offerings. By 2006, market share for APS all-in-one products, which combine portals, application servers and integration suites in a single product, will represent one-third of the combined portal, application server and integration suite market segments. (0.7 probability) Impact on 2003 Gartner Dataquest predicts that the other software vendors will soon offer all-in-one APS products but will also continue to offer AIM technologies separately. Microsoft already offers portal, integration and application server components at a single price under its enterprise license. IBM, Iona, SAP, Sun Microsystems, Sybase and other vendors offer the components of an APS as separate products only. They have not yet defined an APS offering under a common product name or a single package price. Some are just testing the water from a marketing perspective and are in transition from a technology perspective. APS vendors will deliver truly integrated platforms within two to three years (see "APS Will Take One-Third of AIM Market by 2006" SOFT-WW-DP-0107). 3

4 4 Prediction 2003: The AIM Market Consolidates Reacting in 2003 Suites are hot but not because buyers don't like best-of-breed solutions. In these times, many but not all buyers will sacrifice best-of-breed performance to reduce the risk of vendor demise and to deal with fewer suppliers to leverage quantity discounts. The shift toward non-best-ofbreed vendors is by no means universal and not without risk to the user community. In the short term, individual buyers may get better deals or reduced perceived risks, but their failure as a group to support smaller or best-of-breed companies will tend to create an oligopoly of suppliers buyers could be assuring higher prices later, if they don't cultivate second sourcesnow.evidence,sofar,indicatesthatbuyersarefocusedon short-term gains. Prediction: The Commoditization of the Value of Portal Technology Will Continue Gartner Dataquest predicts that the commoditization of the value of portal technology will continue as it becomes a main feature in other software market segments as the battle to control of the user experience heats up. Through 2005, the Portal market growth will diminish dramatically as portal features become a standard part of enterprise applications, application platform and smart enterprise suites. (0.8 probability). Impact on 2003 The portal product market is at the end of its first round of consolidation in which large software vendors have market momentum. The first of two rounds of shakeouts started in early 2001 and should peak by late The overcrowded nature of a market populated primarily by young, small, venture-capital-funded, unprofitable companies, exacerbated by the U.S. economic slowdown, started the elimination of more than half of more than 100 portal software vendors (see "Portal Market Share Is Too Close to Call" SOFT-WW-DP-0085). Reacting in 2003 The large independent software vendors (ISVs) that embed portal services in their platforms will solidify the portal's role in future e-business platforms. Gartner Dataquest believes that only the vendors with strong application integration capabilities will end up as the market leaders in the portal software market. Therefore, all enterprise portal software vendors should do an honest examination and either retarget their products to the premium best-of-breed third generation status, reposition out of the market, become a niche player or court a buyer. Enterprise portal customers should perform extreme amounts of due diligence, and should seek additional risk mitigation items, such as code escrow, to protect themselves from the portal market vendor shakeout.

5 5 Key Issues How is the competitive landscape for this market going to change? How will opportunities in the market be affected by competition, technology and evolving user requirements?

6 6 Prediction 2003: The AIM Market Consolidates This document has been published to the following Marketplace codes: SOFT-WW-DP-0115 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice