September 20, 2002 5:05 PM PDT

To foil rivals, BEA looks to bundle

BEA Systems is expanding its partnership with Hewlett-Packard in a move to fend off software rivals IBM, Sun Microsystems and Oracle.

HP on Monday will announce plans to bundle a free version of BEA's WebLogic application-server software with its HP-UX 11i operating system. HP will also release a version of its management software, the OpenView Transaction Analyzer, to monitor the status of Web transactions running on BEA technology.

BEA is the leader in the $2 billion market for application-server software, technology that runs e-business and Web site transactions. But the company's dominance in the market has begun to waver with increased competition from IBM and Oracle.

BEA's bundling deal with HP also has Sun in mind, as the company recently announced plans to offer a free low-end version of its application server as part of the Solaris operating system. Sun's giveaway could hit BEA hard as BEA sells most of its software on Solaris, running on Sun hardware. Sun ranks fourth in the application-server market with 7.9 percent market share, according to research firm IDC.

HP executives say they will bundle a six-month trial version of BEA's WebLogic application server for HP-UX. In the future, the hardware maker will bundle BEA's software on other operating systems it supports, including Windows 2000, Linux, Tru64 and OpenVMS.

"It does offer an alternative to Sun's strategy," said Gamiel Gran, vice president of BEA's strategic alliances. "We need to respond aggressively in the market. This will expand our market penetration."

Current Analysis analyst Shawn Willett said the expanded HP alliance gives BEA a much needed boost.

"BEA's been under a lot of pressure from IBM, Sun and Oracle, who are all pushing their application servers," Willett said. "This will have a market share effect for BEA eventually. HP has a huge professional services force all over the world and there's a lot of HP-UX customers."

BEA and HP, which have been partners for five years, this summer announced a tighter alliance to jointly sell and market each other's products.

HP, which has been losing money in software, recently announced plans to stop selling its own family of e-business software and instead partner with other software makers, such as HP and Microsoft, to satisfy its customers' software requirements.

 

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