Integration Vendors Speak On IBM's Mid-Market Push

Integration vendors are looking over their shoulders as IBM makes a bid for the hearts, minds, and dollars of small and medium-sized business, a potential growth area in a period of lethargic IT spending. But SeeBeyond Technology Corp.'s CEO Jim Demetriades warns, "You can't just price something lower and expect it to sell to small and medium business."

Last week, IBM introduced two additional, lower cost Express versions of its middleware products, WebSphere Commerce Express for Web site E-commerce and WebSphere MQ Express, its messaging platform. It had previously announced DB2 Express, with the server version priced at $499, plus $99 per user. Middleware products such as WebSphere MQ, formerly known as MQ Series, and core products from BEA Systems, SeeBeyond, Tibco Software, Vitria Technology, and webMethods are typically priced at $225,000. But if they're thinking of moving downstream, the middleware vendors know they will be running into Microsoft, which is making headway as an integration software vendor with its BizTalk XML server, Demetriades says. "What IBM is doing is responding to Microsoft. It's doing something it should be doing," he says.

But he isn't sure it will work. "IBM's strength is in consulting and being a big company. It's safe to do business with IBM." Microsoft's strength "is in giving you a product you can work with, such as BizTalk Server, for $20,000 to $30,000," Demetriades says.

SeeBeyond basically endorses IBM's attempt to take its product line to smaller companies and will seek to bring out a small and medium-sized business integration product itself in 60 days. Called e-Insight Enterprise Service Bus, it will use the XML standard and XML transformation language, XSLT, to integrate business applications across the network, Demetriades says.

Scott Opitz, senior VP of marketing at webMethods, another integration vendor, thinks IBM's move into the small and medium-sized business market is ill advised. "Their products don't really apply to small business," he says.

The demand for integration comes from companies with a large mix of accounting, ERP, and CRM applications "and that problem isn't resident in small businesses," says Opitz. WebMethods will remain focused on the Fortune 2000, he said.

BEA Systems' John Kiger, director of product marketing, says small and medium-sized business purchasers of IBM products will learn that IBM tends to recommend its own specialized products over less-expensive alternatives.

For example, he says, IBM recommends its WebSphere MQ, the former MQ Series, for messaging, while its own application server, WebSphere Application Server, relies on Java Messaging Service. Small and medium-sized business may be unprepared to deal with "the level of complexity" that IBM's middleware stack will bring in addition to the basic Java functions they may be in the process of learning now, he says. Most don't have the IT staff expertise to deal with MQ Series, even if it comes through the door as MQ Express.

BEA Systems isn't shifting its focus toward small and medium-sized business, although it has always included some medium businesses among its customers, Kiger says.

Tibco chief marketing officer George Ahn, a former IBM employee, says "it's not news that IBM is after the small and medium business market. I would say IBM and Microsoft are entering a war there." But he says IBM won't necessarily be able to capture customers simply by lowering the prices on its big-system products.

"You can't expect small companies to run all those millions of lines of code," he says. Small companies worry about "ease of use, total cost of ownership, and whether they have the skills" to manage a new software product.

"The Express software costs may be low but the service people (to install and maintain it) will kill you," Ahn warns. "You can't just price something and expect it to sell. It's your total cost of ownership that matters."