WebSphere Portal Remains the Industry Leader, Says Gartner

Published: July 7, 2008

by Dan Burger

Now that the enterprise portal market has topped $1 billion, it seems as though the momentum is building and substantial changes are taking place with regard to the acceptance of this technology and the development of the skills required to make it fly. What hasn't changed is IBM's position as the top vendor in the portal server field. That position, however, is being challenged in the wake of database and application giant Oracle's acquisition of BEA Systems.

Based on the calculations of the license counters at Gartner, IBM's WebSphere Portal remains the revenue-generating leader for sales figures compiled during 2007. Gartner has researched the portal server market for seven years, and each year WebSphere has led the pack. This time it controls 32.2 percent of the growing market. IBM's revenue in the enterprise portal market were 12 percent higher than in 2006 and are reported to be $352 million. Those sales include new product licenses, maintenance, and technical support for the product.

IBM's competition comes from BEA with 18.2 percent of the pie, Oracle with 12.8 percent, Microsoft with 19.7 percent, and a fragmented group of smaller contenders each with less than 3 percent of the market. Because these are 2007 figures, the report does not factor that Oracle acquired BEA in early 2008 and is just now merging the BEA products into the Fusion middleware line created by Oracle. When the revenue from those two companies is combined, it puts Oracle within a whisper of taking over the leader position, provided the second half of 2008 doesn't hold any surprises for Oracle.

However, the closeness of the numbers when comparing the Oracle/BEA combo with IBM is a bit misleading, says Joanne Correia, one of the lead analysts for this report. "The reality is that when two companies combine (in this case Oracle and BEA), one plus one does not equal two when it comes to income statements. For the first 24 months, it will be more like one plus one equals 1.5. So even though the gap has closed to about one percentage point, the value of the maintenance contracts will be put into the deferred revenue until those contracts are deemed valid. I suspect that even though the gap is close this year, IBM will continue to hold the edge just from an accounting perspective."

The Gartner report also shows Microsoft coming on very strong. Its revenue growth was pegged at 48.6 percent, with revenue jumping from $150 million in 2006 to more than $200 million in 2007. The enterprise portal market as a whole grew at a rate of 16.5 percent and now tops $1.1 billion. Statistically, Microsoft's percentage of increase is huge, but as Correia points out, it's easier to make those kinds of gains when a company owns a smaller share of the market. That's not to dismiss Microsoft's momentum.

SharePoint server is the key ingredient in building portals the Microsoft way, and Correia notes that Gartner is careful to separate revenue generated by portal projects from SharePoint revenue generated by content management and document management projects.

IBM's revenue growth was 12 percent, the same as BEA. Oracle grew at 9.5 percent.

The gains in the portal market in 2007 can be attributed to "a lot of IT departments rebuilding their corporate systems," Correia says. "They need the newer portal technology to do it."

As the portal market matures, changes are occurring. For instance, the types of projects being built have changed, Correia says, from mostly internal-facing projects with efficiencies within the firewall to customer-facing projects that particularly benefit supply chain management. Correia believes security enhancements and service oriented architecture (SOA) integration have led to increased confidence in the technology.

"The return on investment is shorter, the technology is better known, the skill sets are more common, and people are using the software for SOA projects now that one or two projects have been completed," she says.

Jason Anderson, IBM's WebSphere Portal product manager, says there's a change in mindset that has taken portals from being technical IT infrastructure projects to a means to solve business problems. "We've seen customers coming to us to solve a particular business event such as to create a sales dashboard or a customer-facing, self-service Web site," he says. "Technologically, portals have become much easier to consume and deploy. New features have been added to simplify installation, simplify upgrades, and make it easier to deploy technology within the portal."

One example Anderson provided, Duke Medical, went from no portal to a functional patient portal in approximately three-and-a-half months. That timeframe, he says, included the selection of technology, the project concept, and the deployment.

"Portal projects are typically done in phases," Anderson says. "Just a few years ago, 75 percent or so of those first projects were intranet involving human resources or corporate communications. Now it's almost flip-flopped so that 75 percent are doing external projects as their first portal projects. It could be for business partners, suppliers, vendors, or customers." The priorities have changed, too, according to Anderson. He calls it "a risk-aversion decision." Companies are focused on saving money and business decisions have moved toward growth, revenue generation, and customer loyalty.

"This has caused people to become more aggressive and build external-facing portals rather than internal-facing portals," Anderson says. "We've been monitoring this through a program called Business Value Assessment, a pre-sales program working with customers to develop a cost justification." One of the reasons the business justification for portal has changed, Anderson says, relates to companies understanding that they can save money by consolidating all their Web sites to "a single unified presence" using portal technology.

Running WebSphere on System i (now Power Systems) is not uncommon, Anderson says.

"When you think of the iSeries, you may not think of Web portals, but we have a great deal of customers who have deployed on the iSeries. Customers that have an iSeries are comfortable with it and they have staff in place to take care of it."

Anderson says it's difficult to be specific when estimating the percentage of WebSphere portal deployments running on various i platforms. "We ship WebSphere Portal in a package called 'For Multi-Platforms.' We don't always know what is deployed. We find through surveys and reports that iSeries deployments are in the 10 to 15 percent range of all IBM portal deployments."

In the AS/400, iSeries, and System i installed base, WebSphere Portal Express, a slimmer version of the full product, is a popular choice. Anderson estimated that 75 percent of WebSphere Portal installations in this market were choosing the Express product and that of all WebSphere Portal Express customers, 20-plus percent are running that product on an i platform.

Version 6.1 of IBM WebSphere Portal has just been released and is available now.

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