The Java software maker saw explosive growth during the Internet boom of the late 1990s by supplying the back-end application server software to run Web applications. Company CEO and founder Alfred Chuang wants that growth to continue. His goal is to make BEA a US$3 billion company within the next five years.
But things have changed since the go-go days of the Internet boom. BEA is facing increased competition from IBM, Oracle and Microsoft. Open-source application servers are increasingly popular. Corporate customers are also winnowing down the number of technology suppliers they work with.
That can pose a challenge for BEA, which doesn't have the same broad product line or as many contacts within corporate customers as its larger competitors.
BEA's strategy has been to widen its product line around a suite of server products and to popularise cutting-edge software like its WebLogic Workshop Java development tool. In its latest "Liquid Computing" vision, BEA's sales prospects depend largely on the adoption of a modern, more modular design approach called services-oriented architecture. At its eWorld customer conference in San Francisco, company CEO Chuang discussed the company's strategy and size.
Q: You said BEA is the perfect size to innovate. But you could make the argument that as a midsize company with a billion dollars in revenue, you don't have the same development and marketing resources, compared to IBM or Microsoft.A: Well, you could always argue that we are already too big. We have 700-plus engineers, and I had so much more fun when we were 10 people in 1995. But you can't stay at 10 people -- this is about growth.
Innovation has two parts. One is making the technology itself, and the other is taking it to the market. From our perspective, we're still at a size at which we can build something new, like (mobile-technology initiative) Alchemy and get it to market. Large companies can't do that. Their sales process is too complicated, and updating their legacy is too hard. I think we're still at the size where we can innovate and get it to market very quickly.
BEA's always been a company that's invested in cutting-edge technology. Yet some of your competitors, including Sun Microsystems, are implementing the Java standards available rather than adding features beyond the standards and trying to sell on price. Is cutting-edge technology what the market wants all the time?First of all, until we get to a much bigger size, that's the only way that we can play. Otherwise, why would people buy from us? People come to BEA because we have the most innovation, the most reliable, the most usable, most user-friendly technology. That's the driver.
Many new technologies are being sold. Look at how navigational devices in cars went from 1 percent to 15 percent last year. Why is that happening? Ultimately, technology does change the way we live life.
These people are saying, "We don't need to implement more technology, and because we're bigger, you'll buy from us." That never flies. If that were the case, then (mainframe makers) Univac and Sperry should still be in business. They were big enough, had stuff that was good enough, and thought that people don't need to innovate further. I really believe that innovation will be a very important factor for a very long time for a company like us.
How do you become a US$3 billion company by 2005, innovative technology aside?Distribution is a very key part. You can't just keep hiring sales reps to sell directly -- the Oracle model. Eventually, you get stuck even at that size. Or at IBM's. IBM is not a growth company, and neither is Oracle. People don't talk about it, but neither is really a growth company! We have to look at what technology we have that isn't worth selling on our own anymore. Those are the technologies that the distribution channel can really help us selling.
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