Dennis,
What if app servers become a commodity?
I don't remember seeing your screen name, so I'm not sure how comfortable you are discussing the subject in the context of Gorilla Gaming. The problem with the word, "commodity," is that it means so many different things to different people.
Cell phones are a commodity, yet that's what will serve Qualcomm best. Windows is a commodity, yet that has done well for Microsoft. (I realize that depending on the definition, there are valid arguments for saying that Windows is not a commodity.) To the extent that applications servers provide an operating system of sorts, I think commoditizing the product category will be good for the industry. I think the real risk is that the product will become commoditized at the same time that no Gorilla is produced.
As more customers request (require) J2EE compliance of their app servers, what will justify the hefty price that BEA charges for their products?
If the depth and breadth of their components are percieved as a true value proposition, there will be no reason to reduce prices. You could ask the same question about Gemstar or Siebel, and the answer would be the same for those two companies. In the end, if there is no perception of added value, gross profit margins will suffer dramatically.
On the flip side, if BEAS becomes the undisputed industry standard, the company can easily reduce prices and continue to increase revenue and earnings at a healthy clip. If apps servers become as important as I think they will, there will be a lot of elasticity supporting the product category.
--Mike Buckley |
