Monthly Archives: September 2006

Time In Short Supply Lately

I’d like to blog more often, but my time is being consumed lately between consulting projects on one side and the search for permanent gainful employment on the other. One must keep the lights on, after all.

Still, I will get around to commenting on a few matters later this evening.

I get a little frustrated at times, because my preference is to provide substantive, thorough commentary rather than quick hits. Lately, however, as I spend more time looking for work, which entails researching prospective employers, I feel I’ve let the side down a little with respect to post quality.

Until my career situation is resolved, what I might do is err on the side of quality over quantity. I think that’s a healthy compromise.

No matter what happens, I do not intend to close this site down. A few people have expressed to me that they enjoy the material and want to see me continue providing it. For my part, I enjoy writing about industry developments because the process inherently involves having to think clearly and deeply about matters before articulating and communicating positions on them.


Analysts React Favorably to BEA’s SOA Pitch, but Questions Remain

Yesterday BEA held its annual analyst day, in conjunction with its BEA World conference, in San Francisco.

BEA told the assembled market watchers that long-term targets for revenue growth and margin expansion were sustainable through 2008, with revenue growth of 10 percent to 15 percent resulting in margin expansion of two to four percentage points.

Cited as a prime contributor to those results, and serving as a theme for the proceedings, was BEA’s SOA 360 platform, which bundles the company’s Tuxedo, WebLogic, and Aqualogic programs into an integrated on-demand platform.

Technical details on how the disparate products would converge into SOA 360, however, were vague, as were dates for specific deliverables. BEA promised all would be clarified in good time, and pointed out that it would take nearly two years for the full product architecture to be consummated.

Apparently that was all the market analysts needed to put in a favorable word with their investment clientele. BEA shares were up today on the service-oriented architecture (SOA) news, and at least a few analysts spoke glowingly of BEA’s market prospects.

That seems a bit overdone to me. BEA still needs to fill in much of the detail on SOA 360, and it faces stiff competition from Oracle, HP (with Mercury Interactive), WebMethods, and others. A looming threat, as it has been in nearly every other jurisdiction of software infrastructure, is the open-source software movement, represented in the SOA space by vendors such as LogicBlaze.

All BEA really did yesterday was keep pace with the evolutionary vision of SOA. For some analysts, that was enough of a reason to look more favorably on the company’s market prospects. For my part, I’m deferring judgment, both because I want to see more detail and execution from BEA and also because I want to see what cards are played by the other vendors in this space.

Another McAfee Security Researcher Bolts for Microsoft

Whether acquiring companies or individual personnel, Microsoft continues to demonstrate that it is serious about its belated commitment to properly secure its products.

Yesterday, CNET’s reported that Jimmy Kuo, a former McAfee fellow, will join Microsoft as senior security researcher. His move from McAfee to Microsoft mirrors that of Vincent Gullotto, former head of McAfee’s Antivirus and Vulnerability Emergency Response Team (AVERT), who moved from Symantec to Microsoft in August.

Kuo and Gullotto worked together at McAfee, so it isn’t a stretch to surmise that Gullotto played a role in drawing his former colleague to Microsoft.

Napster Hires UBS to Explore “Strategic Options”

Whenever a company announces publicly that it has hired an investment bank to explore strategic options, as Napster did today when it issued an advisory telling the world that it has commissioned UBS to investigate a potential sale of the company, it means one of two things.

It can mean that the company — Napster, in this instance — already has a pending acquisition offer in hand, but that it believes it might be able to extract a higher price, either from the first bidder or a new entrant, as a result of publicly proclaiming its exit-oriented intentions. The other possibility is that the company already has beaten the bushes and come up empty, unable to find a company willing to acquire it for whatever the asking price might be.

It’s a high-stakes move, telling the world that you’ve hired an investment bank to find a merger partner or acquirer. It’s risky because, if no buyer steps forward, Napster will be seen as a lame duck by existing and prospective customers, partners, suppliers, and investors.

For that reason, I will presume that Napster has a bid in hand, but wants to see whether it can do better by using a megaphone to broadcast its intentions to the wider world. That, too, could backfire. The potential acquirer might decide to walk away, or to look elsewhere. That’s not likely, but it has been known to happen.

Whatever the result of this process, it’s clear that Nokia’s recent acquisition of digital-music distributor Loudeye Corp. provoked hopes and dreams of a successful exit outcome at Napster. The question now is whether those hope and dreams will be fulfilled by a buyer.

Construction-Software Vendor Sues Microsoft Over Forefront Brand

I don’t know much about Dexter + Chaney, a $14-million, Seattle-based, privately owned software company whose Forefront Construction Management Software has been sold to builders and construction contractors for more than two decades.

Still, I suspect the company realizes that it is on tenuous logical ground in pressing a lawsuit against Microsoft over the Redmond software behemoth’s use of the Forefront name for its security software.

According to a CNET article, Dexter + Chaney filed suit against Microsoft on Thursday in U.S. District Court for the Western District of Washington in Seattle. The company is seeking an injunction barring Microsoft from using the Forefront name.

Apparently, Dexter + Chaney contends that Microsoft’s Forefront line of enterprise security products, rebranded versions of previous Microsoft business offerings as well as new additions to the company’s enterprise security portfolio, will be confused with the private firm’s vertical-market products for the construction trade.

How Dexter + Chaney’s lawyers can make this case with a straight face, I have no idea. They certainly are attempting to argue their cause with as much conviction as they can muster, as the following remarks from company spokesman Brad Mathews attests:

The brand has come to mean a great deal to us and our clients, and we hope to our prospects as well. . . . They (Microsoft) will be selling under our brand to the very same people that we sell to. Before the marketplace gets confused, and our business is hurt, we’d like them to pick another name."

How one can confuse a vertical-software package for the construction industry, one that provides no semblance of enterprise security functionality, with Microsoft Forefront’s extensive line of enterprise-security offerings is beyond my limited comprehension.

I’m going out on a limb, but I think Dexter + Chaney customers and Microsoft’s customers, and the small number of joint customers the companies share, can readily distinguish between the two companies and their brands. I think the customers are more intelligent than Dexter + Chaney believe them to be.

But who knows what will be decided in a courtroom. It is not for nothing that Charles Dickens wrote that  "the law is an ass." Nobody should assume that common sense and legal verdicts are common progeny of human wisdom. There’s a chance, however remote, that Dexter + Chaney could win this suit in a court of law.

The company’s calculation, I think, is that it can win an out-of-court settlement from Microsoft before the litigation goes before judge and jury. As a result, Microsoft will get to keep the Forefront name and Dexter + Chaney probably will add a significant one-time litigious gain to its balance sheet.

Personally,  I think this case should be dismissed summarily, as soon as possible. What should happen and what might happen are not the same, however, and Microsoft probably will hedge its bets by paying off the litigants and moving on.

It’s a shame, really, because others will be encouraged to follow a similar path, and we’ll continue to see spurious trademark and patent litigation for years to come.

Riverbed Set to IPO Next Week

Riverbed Technology, which competes against some fierce foes in the WAN-application optimization marketplace, will have its initial public offering (IPO) next week.

Based in San Francisco, Riverbed had 2005 sales of $22.9 million, up from 2.6 million in 2004. According to an Associated Press news item on the impending IPO, Riverbed intends to use the proceeds, expected to total about $56.8 million, for working capital and to grow and develop new products.

This is a case where Riverbed really had to turn to the public markets, despite not meeting with the sort of rabid investor enthusiasm that the company hoped to encounter on the road to an IPO.

Riverbed had been through the VC investment cycle, and its financial stakeholders were looking for an exit. At the same time, the company need the capital to fortify itself for technology and sales battles against formidable competitors such as Cisco Systems, F5 Networks, Citrix (through its acquisition of NetScaler), Packeteer, and Juniper Networks.

There’s no question that an acquisition might have produced a better return on investment for the company’s backers, but that option, at least at a price attractive to Riverbed, was not on the table.

Now we’ll see whether Riverbed, which has grown its customer base from 68 to more than 1,000 during the past two years, can continue to make meaningful headway against some unrelenting adversaries. Although the company has executed exceedingly well during the past couple years, the road will get bumpier and go uphill from here.

What’s Behind Juniper-Symantec Partnership?

In the last couple days, I’ve surveyed the extensive coverage of the expanded security partnership between Juniper Networks and Symantec.

I must admit, the announcement leaves us with more questions than answers. The idea, according to the spin the companies have provided, is that Juniper’s network security and Symantec’s content security will be fused in an eventual whole that will represent much more than the sum of its parts, providing comprehensive solutions for unified threat management (UTM), host- and network-based intrusion prevention and detection, network access control, and policy-based content control and filtering spanning individual clients and entire networks.

How they’ll get there, though, and how they’ll address product overlaps between the two companies remain unresolved. There’s still a lot of ambiguity the two companies will need to work through in the planning and execution of this partnership, and let’s keep in mind that it isn’t exclusive.

For the most part, analysts and commentators have fallen into two camps in assessing the implications and repercussions of this alliance.

Some suggest that it likely is a precursor to a merger between Juniper and Symantec. That’s a unlikely scenario. I could see Symantec looking for other acquisitions before it would think of hooking up with Juniper, and the reason Juniper is partnering with Symantec is because it already has reached the conclusion that the markets in which Symantec plays are not ones it wishes to enter.

Others, meanwhile, posit that the real motivation for this announcement is to counter the network-access control interoperability pact that Cisco and Microsoft recently proclaimed. That doesn’t seem likely. Cisco and Microsoft will work together where they must, but it’s a complicated relationship, the classic definition of "coopetition."  They’ll compete in some areas of network access control, and cooperate on others, just as they do in other technologies and markets. Through it all, they’ll be pushed to put customers first, which is why they’ve been compelled to cooperate in the first place.

No, the Cisco-Microsoft announcement wasn’t the driver for this partnership. What I believe did factor into it, however, is Cisco’s relationship with Trend Micro.

Cisco and Juniper came to similar conclusions regarding content security, especially as it relates to email and instant messaging. Both networking vendors though content security was interesting, but it wasn’t a market in which they wanted to play directly, either through a build or a buy. When they looked at the market, they saw intense competition, margin pressures, and mature underlying technologies, such as antivirus. What they also saw was Symantec, Microsoft, McAfee, and others, many of which were entrenched players in long-established content-security markets.

While it’s important for Cisco and Juniper to have partnerships with content-security vendors, they don’t want to compete directly in those markets. So, Cisco formed an extensive partnership with Trend Micro, integrating that company’s antivirus and content-filtering technologies into a wide range of its network-security products and infrastructure. Now, Juniper is doing likewise with Symantec, which gets a network-security partner as a reseller and integrator of its content-security technologies as part of the bargain.

No, Juniper and Symantec aren’t dating as a prologue to marriage, and the Cisco-Microsoft NAC cooperation didn’t drive the partnership, but it’s still an interesting announcement and one that makes perfect sense given industry developments.