Web Services Show Promise, but How Much?

As the tide of Web services hype continues to ebb and flow, two major
research firms this week published bullish studies on the
extensively-covered sector. IDC claimed the market for Web services will
top
$21 billion by 2007, while rival Gartner’s Dataquest unit surveyed what
products are making the biggest splashes in the enterprise.


But two smaller research firms, ZapThink.com and Redmonk aren’t necessarily in agreement with
information the larger firms are offering. They feel the monetary estimates
may be conservative and that other vendors will add choice to the market.


In its “U.S. Web Services Market Analysis, 2002” report, IDC claimed Web
services will epitomize the fabric of computing in the next 10
years, with an estimated market opportunity of $21 billion though 2007,
topping off at $27 billion by 2010 — in the U.S. alone. While most people
think of applications when the buzz phrase Web services is thrown out, this
includes software, services, and hardware opportunities.


Anthony Picardi, Ph.D., senior vice president of Global Software at IDC,
said his company’s forecast shows that Web services opportunities will be
distributed unevenly among vendors.


“The software opportunity will peak first in 2007 and then decline as
customers build out their platforms,” Picardi said. “The hardware
opportunity will follow in 2009 and then professional services in 2011. It
is important for vendors in each of these segments to understand the
current
market trends and adoption rates in order to take the appropriate actions
that will ensure future success.”


The IDC report also found that 5 percent of U.S. enterprises will have
completed Web services projects, with 80 percent having some projects in
motion, by 2008. The fastest growth is anticipated to come from large
manufacturing- and services-oriented outfits, although the market will be
dominated by small enterprises as they become adopters by 2007.


ZapThink Senior Analyst Ronald Schmelzer, whose company analyzes XML and
Web
services technologies exclusively, respectfully disagreed with the approach
of the IDC and Gartner reports with respect to Web services.


“Trying to quantify “Web Services” abstractly is akin to trying to quantify
the market for “client-server” or “object orientation.” They are missing
the
point. If you truly buy into the notion that Web Services will be an
underlying
technology that powers service-oriented applications and point-to-point
integration solutions, then there is no concept of a separate “market” for
Web Services. Rather, Web Services becomes part and parcel of many existing
and emerging markets.”


Schmelzer agreed, however, that Web services will generate a tremendous
amount
of financial possibilities — perhaps even more than IDC has allowed for.


“The $21 billion number is a figure that might be off by as much as two to
three times in size, but it definitely illustrates the promise that Web
Services holds for a wide range of markets,” Schmelzer said.


Redmonk Analyst Stephen O’Grady agreed with IDC’s finding that Web services
is enjoying momentum and holds many opportunities. Standards development
and
momentum, he said, has a big hand in this.


“People have focused on the lack of adoption between enterprises, but
they’re overlooking some of the great work that’s being done inside
organizations,” O’Grady told internetnews.com. He said certain
schemas, standards and languages are gaining traction over others. “XML
over
SOAP and WSDL descriptions are seemingly everywhere these days, and UDDI as
an internal registry is a concept that’s found some buyers,” O’Grady said.
“But we’d agree that adoption landscape is varied from vendor to vendor.


Schmelzer had additional issues with the IDC report.


“Vendors and end-users that are looking to size up the opportunity for Web
Services should first look to the application of Web Services they are
envisioning, not some abstract notion of broad Web Services applicability,”
Schmelzer said. “Surely, there is opportunity for a wide range of
application, service, and infrastructure categories… and an even larger
number of opportunities to implement Web Services and SOAs
[service-oriented
architectures] that have yet to even be imagined. So, while the IDC report
gives a good effort to understand the impact of Web Services, the approach
of trying to quantify and time the opportunity is at best an educated
guess,
and at worse a black art.”

Page 2: Gartner’s study looks at the three most popular
platforms…

Gauging Gartner
Gartner’s Dataquest unveiled its own study, “Systems Integrators and Users
Advance Web Services Use in 2002,” on the white-hot topic this week. But
unlike IDC’s broad financial possibilities, the research firm focused on
what vendor platforms are most popular, based on a survey of 44 consulting
and system integration vendors in North America.


What did the outfit find? Only that Microsoft .Net, IBM WebSphere and
Oracle
are the three leading Web services products they plan to support.


Michele Cantara, principal analyst for Gartner Dataquest’s IT Services
group, said .Net was targeted by 58 percent of system integrators as one of
the top three Web services products to ramp up delivery capability, with 40
percent tabbing WebSphere and 31 percent citing Oracle as one of their top
three Web services products.


Moreover, Gartner Dataquest surveyed 138 enterprises that were using or
planning to use a system integrator to design or use Web services.
Thirty-three percent of end users are leaning toward Microsoft .Net, while
39
percent plan to use Java/J2EE. Interestingly, smaller companies favored
Microsoft .Net, while larger companies favored Java 2 Enterprise Edition
architectures and products. Research
firm Evan Data Corp. published
results
to a similar study in October, predicting .NET and Java would
be
neck and neck a year from now.

“While larger companies tended to have established a Web services platform
of choice, smaller companies were still undecided. This shows that the
systems integrator does not always dictate the choice of Web services
platforms, and that Web services software vendors that are not among the
chosen few should look at the smaller, undecided companies where they are
more likely to find opportunity for their product,” said Joanne Correia,
vice president for Gartner Dataquest’s Software Industry Research group.

Redmonk’s O’Grady said Gartner’s vendor choices makes sense, albeit with a
caveat.


“Gartner’s vendor choices are as good as any, although it does ignore some
of the smaller vendors with some great technology like Cape Clear, who have
won real customers such as BT,” O’Grady said. Other companies who adhere to
similar Web services management goals as Cape Clear include upstarts Confluent, WestGlobal, Blue Titan, AmberPoint and Talking
Blocks.


“We’ve actually contended for some time that despite Microsoft’s surprising
admission that they bungled the marketing and communications effort for
.NET, it’s actually got some great mindshare in the Web services arena —
this confirms that. IBM and Oracle, likewise, have parleyed their strengths
in installed base and standards work to some success as well.”


Again, O’Grady pointed to emerging standards.


“One last major factor to consider is that there is more to the world than
the Web services stack — Gartner may only be counting Web services in
those
terms, but there is real work being done around ebXML ,”
O’Grady said. “The OASIS ebMS messaging transport is gaining some traction,
industry verticals and more pertinently government purchasing departments
are also beginning to mandate ebXML.”


XML is the primary language used to write Web services
applications. Electronic Business XML, or ebXML, takes XML a step further
by
letting companies communicate over the Web. It is designed to enable a
global electronic marketplace in which enterprises of any size, and in any
location, could safely and securely transact business through the exchange
of XML-based messages.


Schmelzer said declaring leadership positions in this nascent space is
premature.


“Trying to call the leaders of the Web services market at this stage is
like
trying to judge the Tour de France at the first stage, or a marathon in the
first mile. Best practices for Web Services and services-oriented
architecture (SOA) adoption have yet to be determined, and it is not
entirely clear who the leaders will be come 5 years from now. While the app
server vendors clearly are the 800-pound gorillas in this space, saying
that
app server vendors are the “Web Services leaders” would be like saying that
the Web server and browser vendors were the “Web leaders” in 1995. Clearly,
expenditure on Web technologies far exceeds that of just the simple Web
server vendors.”


But even before one can gauge financial windfalls, there are critical
barriers and trends ahead, O’Grady said, which may lead to even greater
market opportunities for those willing to join the race.


“We’re of the opinion that the real impediments to Web services adoption
are
two things: security, and interoperability,” O’Grady said. “The latter is
being addressed
via work that the WS-I (Web Services
Interoperability Forum) is doing, and its recent inclusion into the J2EE
spec indicates the weight it carries there. Security is a little more
problematical, and until it’s addressed, widespread inter-enterprise
adoption is unlikely. Even given that, however, IDC’s forecast looks a
little conservative, as enterprises increasingly adopt it as a more
effective integration mechanism. And if security and interoperability are
addressed in the next year, their numbers will be way off.


To be sure, ZapThink said the market for XML and Web Services security is
expected to grow from $40 million in 2001 to $4.4 billion by 2006. Factor
that chunk into IDC’s figures, and it adds quite a bit to the estimates.


But one thing most analysts and research firms are in agreement on, is that
once Web services evolve and are assimilated into the enterprise, new
challenges will emerge for the IT industry to address. This places a
premium
on cooperation among vendors to make interoperability happen, so that the
software-as-a-service revolution doesn’t bog down in a swamp of inertia.


If the firms leap those hurdles, it will likely lead to more product
innovation. As for a market estimate, it’s in the hands of the vendors
leading it, including Microsoft, IBM and Oracle, as well as the smaller
firms and a little influence from the economy thrown in for good measure.

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