Analysis - HP is missing Web services ship

Hewlett-Packard Co. confirmed months of rumors this week when it said it is abandoning several of its middleware products. By leaving for dead much of the application server stack it acquired from Bluestone Software Inc. for approximately US$470 million, HP in effect is also leaving behind an ambition to be a leader in Web services infrastructure.

Not long ago, HP held the potential to be a mighty player in the Web services infrastructure space. In the words of one industry expert, who requested not to be named, "First HP invented the Web services boat [with eSpeak], and then they fell out of that very boat."

HP said on Monday that it is discontinuing several middleware products and will instead address that market segment through partnerships with other vendors, including Microsoft Corp. and BEA Systems Inc.

HP's Netaction Application Server, Netaction Web Services Platform, and Web Services Registry are being eliminated, HP said. Transition program details will be announced by Sept. 15, according to HP. HP officials also confirmed the company has stopped developing eSpeak, a technology for connecting networked devices that was once considered ahead of its time.

HP's Netaction product line was created through the company's Bluestone Software acquisition in early 2001. But the products gained little traction among customers, and HP's software priorities remained elsewhere, according to analysts.

Shawn Willett, a principal analyst at Sterling, Va.-based Current Analysis Inc., said HP had a solid opportunity to take a leading role in Web services when it bought Bluestone.

"Bluestone had a pretty good stack. HP just couldn't figure out how to use it," Willett said.

That is not to say that HP is abandoning the notion of Web services altogether. Instead, the Palo Alto, Calif.-based company will be relying on partners to provide the Web services infrastructure.

HP wants to be a neutral player in the battle between Java and Microsoft's competing .Net technology, said Nora Denzel, senior vice president of HP Software. Moving forward, for customers who favor Java the company will offer systems built primarily around BEA's WebLogic middleware family. For customers who prefer Windows it will offer Microsoft's .Net products.

"It makes sense to have a more vendor-agnostic strategy and not be heavily weighted toward one stack or another, and that called for a partnering strategy," Denzel said. In addition, she noted, the middleware market is becoming "heavily commoditized."

Analysts have said the strategy poses some risks for HP. Application servers and other middleware have become central to the industry's efforts to link business applications over the Internet, with the goal of streamlining corporate operations and cutting costs. Without any middleware of its own, HP loses an important part of its relationship with its customer, analysts have said.

Current Analysis' Willett added that by discarding its middleware and relying on partners, HP loses an edge in terms of competition.

"They will be less of a competitor in all Web services spaces without the middleware offering," Willett said.

HP will focus its software development efforts around its OpenView network management portfolio, its Opencall communications suite, and its Utility Data Center software for automating data center operations, the company said.

In March, HP detailed a pact with Sun Microsystems Inc. to combine Open View with Sun ONE (Open Network Environment) to form a Web services management platform that automates the event and transaction monitoring, performance, and usage measurement services of HP OpenView across networks, applications, and services.

The obstacle that accompanies HP putting its Web services strategy in the management realm, according to John Meyer, an analyst at Cambridge, Mass.-based Giga Information Group Inc., is that the Web services infrastructure providers -- IBM specifically -- are working to offer end-to-end Web services offerings that include management capabilities similar to what HP will offer.

"IBM, Sun, Microsoft, and BEA are all bundling end-to-end management for Web services too, so customers will want to buy it from them, instead of a third party," Meyer said.

Other experts said that while Web services are important to the futures of Microsoft, Sun, and BEA, HP's success is not as dependant on the Web services stack.

"From HP's perspective, they have bigger fish to fry with the Compaq merger than standard technologies, which is what J2EE application servers are," said Martin LaMonica, an independent analyst based in Arlington, Mass. "Their main priority is finding the products that will stand out. They cannot carry around a lot of dead wood right now."

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