RealTime IT News

It Can Get Lonely In A Crowded Market

Remember when Java was the hot topic in high technology?

That was two years ago, when dozens of software vendors were jumping on the bandwagon being built by Java creator Sun Microsystems to derail Microsoft's monopoly in computer operating systems.

The Java movement attracted thousands of programmers and millions of dollars in venture capital, as one start-up after another wrapped themselves in the "write once, run anywhere" flag.

Now, other than programmers and marketing executives, no one really talks much about Java these days. And not necessarily because Java is a failure, though it certainly hasn't come close to matching the overblown claims from Sun and other Java adherents such as Oracle that the programming language would usher in a utopian era of cross-platform computing.

Rather, Java has quietly been assimilated into the middleware environments of many corporate networks, where it often is used to communicate between legacy systems and Internet-based applications. That's why IBM is so committed to Java; it enables existing customers to join the Internet world without having to scrap their old mainframes from Big Blue.

One of the many companies striving to find a niche in that middleware market is Bluestone Software, which last Friday registered with the SEC for an initial public offering of stock designed to raise $46 million.

Bluestone sells Web application servers, which organizations use to handle browser-based requests for Web pages or information from back-end databases. Because of the explosive growth of e-commerce, the application server market is forecast by Forrester Research to top $2 billion in revenue by 2002.

But the market has experienced a shakeout in the past year, as a number of start-ups have been bought by larger companies such as BEA Systems (which acquired WebLogic) and Sun Microsystems (NetDynamics). And with other giants such as Microsoft, IBM and Oracle offering their own application servers, smaller companies such as Bluestone, Allaire and Silverstream Software (which filed on June 11 to go public) are left fighting for scraps.

Now, in a $2 billion market, scraps might make a decent meal. Bluestone, however, seems to be having problems getting its share. Revenue fell last year to $8.1 million from $9.7 million in '97, while net loss increased from $3.9 million to $11.6 million.

Bluestone, based in Mount Laurel, NJ, is trying to broaden its revenue stream with XML (extensible mark-up language) software introduced this year for Internet commerce. Still, there's no guarantee that XML will be adopted as a standard.

Overall, Bluestone is a company that gets high marks from technology analysts for its products. But the company appears to be groping for a niche in a market dominated by big players. That makes its long-term growth prospects questionable. And with most of the big vendors having already acquired smaller application server vendors, Bluestone may haveno choice but to go it alone, hence the IPO.


ALL NEW! internet.com's HotWatch a monthly e-mail subscription for $99, featuring Internet Stock Report's Steve Harmon, and his top 10 noteworthy Internet stocks for the month. Each month you will receive in-depth analysis on the top 10 Internet stocks to watch with the information you need to assess the fast-paced nature of Internet stocks. Staying on top of market changes in the Internet Stock market is what counts. For $99 per year, you receive 12 timely issues sent to you by e-mail. Don't wait, our next issue will be out before you know it with a whole new perspective on the market. Sign up today at: e-newsletters