Big-ticket software gets a trim

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year and adopted a per-user license model but did not appear in the top-five server suite vendors in terms of revenue.

Another company that is pushing into the middleware market is SAP with its NetWeaver infrastructure software, standards-based middleware designed to make SAP applications better connect to outside systems. Rather than cede dollars earmarked for middleware to others, SAP is counting on NetWeaver to spur upgrades of its applications and expand its market influence.

Pure-play pressure
The middleware category that is seeing the most price pressure is application servers, software that runs custom-written programs and handles transactions. On top of JBoss, there are other open-source application servers in the market, including Jonas and Geronimo, which are based on the Java 2 Enterprise Edition, or J2EE, standard.

As a result, Gartner forecasts that the total revenue from application server license sales will start to decline in 2006. Estimates of application server market share, which do not figure in open-source products, now represent about $1.2 billion in sales.

Consulting firm Back Bay Technologies, for example, decided to choose all open-source components to rebuild a commerce and news Web site called the Remy Report. The company decided to use open-source software, including JBoss, because the absence of up-front license fees made the total package cheaper, said Marc Maselli, CEO of Back Bay Technologies.

Customers are getting more options to get support services for open-source products. A number of companies have formed to provide maintenance, installation and ongoing support around open-source middleware tools, usually on a subscription basis.

Gartner's Correia said that the competitive forces of bundling suites of server software and open-source will make life increasingly challenging for specialized, or "pure-play" vendors, which sell standalone application servers or integration products.

"The reality in every single (customer account) is that particularly the pure-play vendors have to compete against established relationships or compete with something that's sitting there for free," she said.

It's a good thing

I feel that small business will start to feel more comfortable about buying networking software and benefit highly from deals such as free tech support and upgrades. With the economy the way it is everywhere, I personally wouldn't be inclined to purchase high-end user software if it ate at my bottom line.

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Double-edged sword

Before you stop and cheer too loudly, consider the downside to this.

Almost certainly the number of vendors will decrease. When was this ever a good thing?

Traditional software companies will be forced towards the Microsoft model of selling low-margin products. This isn?t a dance many large companies do well. Expect more layoffs and declining stock prices.

Eventually, we?ll find a new equilibrium. But, in the meantime, it?s going to get ugly.