IBM targets SMEs with open source Java buy
Published: 11 May 2005 10:15 BST
IBM on Tuesday said it acquired privately held start-up Gluecode Software, a company that offers a low-end, open source alternative to IBM's WebSphere line.
Terms of the acquisition were not disclosed.
Based in El Segundo, California, Gluecode sells corporate customers services around a suite of open source software developed at the Apache Foundation. The company offers small and midsize businesses subscription-based support and updates for a suite of Java server products, called Joe.
As part of the acquisition, IBM said it will contribute to the Apache Geronimo project, a J2EE application server that forms the basis of Gluecode's product line. The 18 Gluecode employees will be part of IBM's software group; IBM said it will devote dozens of people to the Joe product.
IBM said the Gluecode products will fill out the low end of its WebSphere suite. IBM's WebSphere brand covers a wide range of products, including an application server, portal and integration software.
WebSphere is targeted at large corporate customers and at medium-size companies, but IBM does not have a strong presence among smaller organisations and individual developers, said Robert LeBlanc, general manager of IBM's application and integration middleware division. He said IBM will offer Gluecode customers more functional WebSphere products as their needs expand.
"There is a shift in the business model that the low end of the market is looking for and a shift in the robustness of what's coming out in the J2EE market," LeBlanc said. "We see a lot of opportunity at the low end of the market."
Smaller organisations and programmers are increasingly getting open source development products for free and paying for ongoing support services, he noted.
Indeed, Gluecode is one of several new companies building a services businesses with open source infrastructure software. Gluecode's offerings include updates and support for an integrated package of open source products, including the Geronimo application server, portal, database and work flow server.
The rise of these open source alternatives to WebSphere, notably from JBoss, motivated IBM's investment in Gluecode, said Anne Thomas Manes, an analyst at Burton Group.
"This is a clear assault on JBoss," Manes said. "If IBM owns it, I see Geronimo as a serious threat to JBoss, more so than to IBM's WebSphere, BEA, SAP or other proprietary Java vendors."
Manes noted that the Apache license makes Geronimo attractive to third-party software companies, which can embed the application server. Much of JBoss' revenue comes from reseller arrangements with other software companies.
LeBlanc said IBM's familiarity with the Apache license and Gluecode employees' connections at the Apache Foundation were factors in deciding to back Geronimo and buy Gluecode. He said IBM considered open-sourcing portions of WebSphere to get a better foothold in the low end of the market.
"We know how to take products to market based on the Apache license, which is important," LeBlanc said. IBM bundles the Apache Web server with WebSphere, and it contributed an embedded database called Derby to Apache.
Bob Bickel, vice-president of corporate strategy at JBoss, said the move by IBM helps legitimise the use of open source middleware.
"This is clearly a move to try to create a competitor to JBoss with the Geronimo project," Bickel said. "IBM does not want to see JBoss rise to dominance, like Microsoft."
Delphi Group analyst Nathaniel Palmer said the Gluecode acquisition, though small, is the most significant for IBM Software since its takeover of Lotus Software in 1995 because it enables IBM to put competitive pressure on rivals.
"The cost advantage of Gluecode presents pricing pressure on all J2EE platforms, as well as leverage for penetrating the SMB in ways previously out of reach to IBM," Palmer said.
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