When Giants Tremble

The reversal of the Microsoft breakup ruling surprised next to nobody. Wall Street shrugged, with the stock inching up a few percentage points. The die was cast when Judge Jackson’s critiques of Microsoft after his ruling compromised the appearance of objectivity. Of course there was the DC Appeals Court’s known hostility to antitrust cases, not to mention questions of whether the Bush administration would seriously push the case if the rulings went the other way.

But no court ruling can alter the facts of life: the technology market has consolidated because the market has voted for the Jack Welch philosophy: don’t take a company seriously if it isn’t first or second in its market. Remember, buying hardware or software is like buying equity–the last thing you want is for your vendor to go belly up, and your product orphaned.

And even if Microsoft bullied Netscape, most of the victim’s wounds were self-inflicted. Yes, Microsoft undermined Netscape Navigator, but who could have made a real market in browsers alone? Maybe build a real enterprise business, or bundle in consumer goodies like a music player and legal Napster-like subscription service, and then you might have had something that people would actually pay for. Instead, Netscape let companies like BEA and Real Networks seize the initiative.

Microsoft will likely get its hands slapped during the penalty phase. So what can we learn here? Big remains OK with the courts and the market as well. But big companies are not always safer investments. (Remember DEC?) CA, whose product lines are far less coherent than Microsoft’s, has become the poster child for bloat. Yes, it will probably win its upcoming proxy skirmish, but don’t be surprised if CA has to start shedding weight. Soon.

Keeping the Lid On

Going to any Linux user group meeting is like engaging in time travel. The utopian ideals about placing software in the public domain have clear sixties rings, and on the surface, appear to be pretty flaky ways to develop software. Yet the success of Apache and the recent move by “adults” like IBM to form a group for testing approved Linux distributions has demonstrated that the open source “bazaar” is not so bizarre.

More to the point, open source has placed traditional “good guys” of the open systems world on the defensive. If your software is so open, why not release the source code? The issue has dogged Sun because Java was supposed to be the politically correct answer to the Microsoft juggernaut. Yet the best that Sun would venture was opening Java to a “community process” where it remained first among equals.

Microsoft has also been knocked for a loop by open source. As part of its .NET rollouts, Microsoft recently responded with the “Shared Development Process” (SDP), throwing in Hailstorm services as the first SDP guinea pig. There will actually be three levels of SDP, from review to peer development and arms-length industry working groups. Microsoft is clearly stepping gingerly, in that it has not committed to submitting other technologies (beyond mentioning the possibility of BizTalk industry frameworks) through the new process. But SDP has clear boundaries. Crown jewels like the Windows.NET platform won’t go into anything resembling community development.

Clearly, the success of open source has required the industry to make politically correct noises. But economics, rather than sound bytes, are really driving the quest for community-like alternatives. The seeming chaos of open source has actually proven a rather efficient mechanism for attracting third, fourth, or even fifth-party developers who can transform foundation technologies, such as OSs or application frameworks, into de facto standards.

The bottom line however is that open or community source involves, not just forgoing some level of control, but revenue opportunities as well. In an economic climate where technology vendor margins are strained, the question whether to hold on to the rights to every last piece of intellectual property is no longer so clear.

Boys Will Be Boys

There’s something about the IT industry that causes people-mostly guys-to regress. Go to any Java conference, and you’ll first have to wade through air hockey tables before you can find the exhibit hall or tech sessions. Log onto any IT news group, and it’s easy to mistake yourself inside some locker room.

Or go listen to the grownups of the industry speak.

Late last week, Oracle rolled out 9i, with Larry Ellison spending most of his remarks trash talking IBM. Nobody has ever done clustering because it’s so hard, but 9i’s improved shared-disk architecture performs better than DB2 and is far more fault-tolerant. Showing an SAP ATO (assemble-to-order) benchmark, Oracle claimed 89% scalability on two nodes vs. 34% for DB2 in, and so on. But Oracle concedes that its benchmarks have not yet been officially audited by SAP.

Ellison even tried turning Oracle’s exorbitant pricing into another chance to bash IBM. Yes, Oracle was dumping its hated power unit pricing for CPU, but at $40k/processor for the enterprise version, is still 2x that of DB2 Enterprise Edition. No matter, said Ellison, Oracle throws in things like OLAP, data mining, messaging, security and other features that you have to pay separately for with DB2. Naturally, IBM refutes all this.

But facts aren’t important here. Demos are demos, and any vendor can always skew pricing comparisons. Yes, it’s important that Oracle has improved its clustering. Maybe somebody will finally try this at home. But the real issue is who was Ellison really talking to. DBAs, who trained on a given database, won’t throw out their life’s work lightly. CIOs considering switching must then deal with the mess of replacing their DB2 DBAs with scarce Oracle folks, or vice versa. All this explains why even Sybase has kept its toehold on Wall St.

Database vendors have to try hard to lose their markets. The most important takeaway from last week is that Oracle realized that that was exactly what it was doing with pricing.

Java One 2001: Waiting for the Other Shoe to Drop

Java is becoming a victim of its own success. For now, J2EE has become the only game in town for scalable web applications. Even SAP, which until now was wedded to Microsoft’s web architecture, has bitten the bullet with its own J2EE-based remake of MySAP.com. SAP couldn’t wait for .NET, or for upstarts like BroadVision to steal its thunder B2B-ERP’s next frontier.

But this year’s Java One was more noticeable for what wasn’t there: Real XML integration and real use for products coming from Java’s next frontier, the embedded device. Not surprisingly, most of the questions at Sun’s opening press conference were about its sagging quarterly numbers, not Java.

With .NET knocking on J2EE’s door, Sun is now stealing a page from Microsoft. In the next few months, it will release “service packs” offering goodies such as Java XML binding, rather than wait for the release of J2EE 1.4, now at least 6 – 8 months away.

At least at the enterprise end of Java, there are real stakes to fight about. At the other end of the spectrum, embedded Java, there is little if any agreement on whether J2ME (Java 2 Micro Edition, which was originally aimed at this sector) is adequate, or whether you need the security features of J2SE (Standard Edition, designed for PC clients). Or, whether Sun’s KVM is the right Java Virtual Machine, or whether “clean room” versions from players like HP or Kada are better sized for the job. And finally, can the world do with just the MIDP profile (which specifies all the Java classes), or whether PDAs merit their own “Palm Profile?”

That there is debate isn’t notable. Instead, the operable question is whether there is a market. The proprietary OSs of Palm, RIM, and Pocket PC devices have proven little obstacles to today’s killer hand-held apps: calendar and address book. The benefits of Java on phones won’t matter much until advanced 2.5 or 3G networks proliferate the landscape. The same goes for putting Java or whatever on advanced set top boxes, which await broadband rollout. Even AT&T Broadband, which had signed an almost exclusive agreement with Microsoft, is now hedging its bets.

The message from Java One 2001? Keep deploying J2EE e-business servers. For anything else, wait ’till next year.