The Abstract Truth

JBoss (and possibly TomCat) should never have happened.

Posted by rbpasker on January 17, 2008

BEA made a lot of mistakes. Letting JBoss out of the box was probably its biggest.

While BEA was looking “up” at its biggest competitor IBM, JBoss was busily undercutting BEA at the bottom end.

The old mantra for enterprise software companies was that in order to have high gross margins, the labor-intensive services part of the business had to remain well below 40% of revenue. And since middleware was so critical to the F500, license costs had to be suitably high. BEA’s business was tied big deals at $10K/cpu.

JBoss launched an innovators dilemma attack against BEA, not with a revolutionary product, but with a revolutionary business model, one that BEA couldn’t hope to copy without cannibalizing its existing revenue stream. BEA fell right into the trap.

Also, at the time WebLogic, Inc., was acquired we had two server offerings, which became known as WebLogic Server and WebLogic Express. They were in fact identical code bases, but the “Express” product was a Servlet engine with JDBC, and no clustering, EJB, or other fancy stuff. It cost about $2500.

The great thing about this product was that if you were building a web-based application, you could get on board cheaply. This product was effectively killed off because BEA (and the sales team) didn’t think a billion dollar company could have $2500 product, especially when they could sell a $10K/cpu product wrapped inside a 6- or 7-figure deal. Enter JBoss, with its low price of adoption, and a 2-horse race became a 3-horse one.

In February 2003, BEA finally had to backtrack, and reintroduce the Express product.. A month later, they lowered the price from $695 to $495, a silly move in a market that is not price sensitive at that cost. Unfortunately, it was already too late.

Please read this update.

[Its also interesting to note that C|Net erroneously called this a “introduction,” not a re-introduction, and that it was in response to IBM’s “express” product.]

5 Responses to “JBoss (and possibly TomCat) should never have happened.”

  1. Cool post. I really enjoy the inside stories on stuff like this. Question: at that low price, was JBoss losing money and burning VC capital, or were they still making money, just not getting super rich? IOW, was the market size sufficiently large to support JBoss selling their app server for cheap and still do OK given the development and maintenance costs to keep it going?

  2. rbpasker said

    I did due diligence on JBOSS for one of their investors, and JBOSS claimed at the time that were cash-flow positive.

  3. rbpasker said

    Also, IIRC, a comparative 3-year TCO versus WebLogic showed that WebLogic was 8x more expensive.

  4. […] JBoss (and possibly TomCat) should never have happened. […]

  5. […] JBoss (and possibly TomCat) should never have happened. […]

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