Used to be that having a 'virtual monopoly' was a good thing.
With BEAS acquisition of Top End they have a virtual monopoly in the Open Systems transaction processing monitor marketplace. IBM's CICS is proprietary and their Encina product line is sold by their sales force, largely to IBM only clients. Non-Stop, formerly owned by Tandem is now relegated to a slow death in the hands of Compaq, much like Tuxedo was before BEAS acquired it (maybe a good acquisition for BEAS after they digest Top End).
Acquisition of Top End (for probably about a buck a share) gives BEAS a lock on joint marketing with NCR, very big in Europe, and provides them an XA TP monitor saavy programming staff, not to mention 100% TP monitor market share on NCR's UNIX product line. They are the only non-IBM game in town for transaction processing monitors on UNIX (yes I know there are some other small proprietary versions out there with tiny market shares, promoted only by their hw companies -- I put them in the same camp as IBM).
In case no one has figured it out yet, client/server as we know it today is dead. It doesnt' run via WAN unless you go Citrix, which even the mighty Microsoft can't ge to work correctly in NT. Most of the 'high volume' applications are migrating to Tuxedo -- take a look at Peoplesoft release 7.5 for an example. You can build all the client/server applications you want and they run fine in house -- til you want to run it in Cleveland or Boston from the home office in Memphis and you don't happen to have a T-3 available for the 4 person staff in each of those offices. Sound familiar to you Powerbuilder types? Remote office testing is usually last, after you've already spent $2M to develop it. 4 second response time local, 2 minute response time in Cleveland. Not good. Replace the middleware layer with Tuxedo and try it again. The Peoplesoft users we just brought online in the UK get the same response time we get here in the states on V7.5 of Peoplesoft (Oracle wake up and smell the coffee...).
In case no one reads the fine print, Oracle doesn't use SQL*Net for its TPC benchmarks -- it uses Tuxedo. SQL*Net is a 'low end' competitor to Tuxedo. SQL*Net can't do anything elaborate, e.g. data dependent routing, transaction queuing, heterogenous two-phase commit involving non-Oracle databases. Yes, they will say it can do these things via their gateways, etc. What a kluge -- I know I used to sell it for them. "Use Tuxedo instead", is what I had to tell my large clients who needed to do anything big, complex or involving high volumes. If Larry is observant, he should buy BEAS before their market capitalization grows beyond his reach. His SQL*Net division isn't going to gain ground here. The product was always treated like a black box product, to be invisible under a simple client to database or database to database scenario. It isn't built on the XA standards. It is entirely proprietary. If he wasn't so busy fixing his application division that is trying desperately to use his own tools, he'd realize that BEAS would nicely complement his middleware offerings, not compete with them.
Microsoft COM/DCOM, while nice in principal, hasn't been adopted by anyone but Microsoft. In a heterogenous environment involving IBM Mainframes, LAN Servers, Web Servers, UNIX Mainframes and of course, the MS Desktops you couldn't use COM/DCOM to do a complex transaction involving multiple databases -- it doesn't exist. By the time it does, those with $$$, who have to build their internet/intranet apps, or replace aging business applications will have already done something else. With BEAS software you could perform a transaction that booked a hotel, flight and car on systems from three different companies with certainty that they all succeeded, or all failed. You would have a complete itinerary, not a flight, but no car or hotel. Try that with COM/DCOM. I don't believe SABRE has a COM/DCOM interface as yet... Gee does IBM do COM/DCOM?
In case it was missed earlier, BEAS customer retention is 100%. That is because the Tuxedo based applications are typically mission critical. They go in and stay in. They grow, the number of users expands and as companies merge, the application suites they service also grow. Tuxedo is heavily used in banking. Tandem Non-Stop transaction processing monitors still service a substantial portion of all ATM and banking transactions worldwide. Will Compaq be silly enough to sell these software divisions to BEAS -- we could only hope.
The consulting agreements and acquisitions that BEAS announced are more than trivial. The rates for these engagements start around $2500/day and go from there. Being able to build objects that can guarantee transactional integrity across heterogenous environments (include the intranet) is no small feat. Look at Oracle's revenues -- something like half is now services. Peoplesoft derives 40-50% of their revenues from services. Compaq bought DEC so they could sell services (installation, maintenance, etc. -- which is why they sold their Object Broker technology to BEAS -- they didn't need it. Will They do the same with the Non-Stop technology? BEAS will derive significant revenues from consulting and from consulting agreements.
BEAS is also sold directly by all the OEMs: IBM, NCR, Sun..., as well as the vendors that have integrated them, e.g. Peoplesoft. It doesn't matter how may offices you have -- feet on the street is the most important aspect in gaining and maintaining market share. BEAS has worldwide market presence of their own and a host of others to sell for them. Sun has been tremendously successful at leveraging its own sales force in this manner.
Lastly, the people running BEAS are veterans. The original author of Tuxedo is a principal. They have made strategic staffing acquisitions from leading software companies. BEAS isn't a flash in the pan company, with a short lived technology, and it isn't attracting junior management either.
Yes a multiple of 630 is high. Probably was more attractive at infinity. Top End revenues coming on line, along with consulting revenues and worldwide sales growth should bring this down to a palatable 30-60 PE this year.
Remember, growth through acquisition didn't hurt Computer Associates over the years -- and they only pick up the walking dead (sorry Ingres).
Stay tuned.
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