IBM-BEA Deal: Buy Solaris, Get WebLogic Free

By Maria Trombly | Securities Industry News | Dec. 23, 2002

Just in time for the holidays, customers who buy Sun's Solaris 9 operating system will get six free months of BEA Systems' WebLogic Server. The deal may be a sign that Sun is having problems with its own Sun One Application Server, but it's a great coup for BEA in its competition against IBM's WebSphere.

IBM and BEA are currently virtually head-to-head, with many Wall Street customers using one, or both, of the two Web development platforms. BEA and IBM lead the application server market with roughly equal shares, followed by Oracle, Sun and other smaller vendors, according to analyst estimates.

"IBM has the best access to enterprise customers," said John Rymer, an analyst at Cambridge, Mass.-based Giga Information Group. "They have long-standing, very high-level relations with the largest companies in the world."

In order to compete, BEA had to develop similar depth in its sales channels and the recent deal with Sun, as well as September's similar deal with HP, are significant steps in that direction, he said.

"There was a time when Sun first came out with Sun One, they were saying, We're going to bury BEA.' That's patched up now," he said. "So BEA has access through the Sun channel to those customers that are doing business with Sun. They need this-they need every channel into the enterprise in order to compete with IBM."

According to BEA's Gamiel Gran, vice president for strategic alliances, the WebLogic product that will be shipped with Solaris 9 will be fully functional, equivalent to anything that a customer might purchase outright. Customers will be able to use it to develop, manage and deploy Web services. However, it does not include addition products such as WebLogic Integration or WebLogic Portal.

Gran said he expects customers to use the product to do initial deployment and testing and then purchase a license if they are satisfied. It is similar to the deal that BEA has with HP. By comparison, a standard trial period from BEA is only for 30 days.

"We think that this reaches a set of customers that we have not directly sold to before," Gran said.

While the deal seems to be a step forward for BEA, it could be a sign that Sun's once iron-firm grip on its market is slipping. Sun is able to sell hardware that is comparatively more expensive than many alternatives partly because of the advantages offered by its software, said Damon Kovelsky, an analyst at Newton, Mass.-based Meridien Research, now part of International Data Corp. "It's a sign that their dominance is no longer guaranteed," he said.

However, it may be too soon to rule out Sun One altogether, said Rymer.

"Sun is not going to give up on it three months into its life," he said. "They're going to try to make it work, and if I was in their shoes, I'm not going to give up either."

Sun will continue to ship Sun One, along with BEA WebLogic, with Solaris.

According to Rymer, WebLogic is a very popular platform for Sun's customers, and the inclusion of the platform was a direct response to customer needs and will help with sales in today's very competitive environment.

"If I were Sun, I would need all the help I could get selling servers," he said.