ATG adopts application-centric strategy

Struggling Art Technology Group Inc. (ATG) this week detailed plans to port its suite of e-commerce applications to competing platforms, a strategy analysts characterized as a necessary but risky move.

Cambridge, Mass.-based ATG said its flagship Dynamo application server and application suite will run on Web application servers from BEA Systems Inc., Hewlett-Packard Co. and iPlanet E-Commerce Solutions by year's end. ATG will continue to support its own application server, said Jeet Singh, ATG's CEO, but the new strategy puts greater emphasis on its application set.

ATG's application server suite includes a commerce server with storefront and online selling functionality; a scenario server for providing and defining e-business relationships; and a personalization server for targeting online customer shopping patterns. ATG's Dynamo application server is required to run these applications.

"It's going to be a tough transition for ATG, because what will make anyone buy the [application] server now?" said Jim Murphy, an analyst at Boston-based AMR Research Inc. "The larger companies have already standardized on IBM and BEA, so it will be a struggle for them to distinguish their applications against the rest."

Singh said adopting an "agnostic approach and supporting some other platforms" was the best option to stay competitive in a market that's "going to get pretty bloody" because of the continuing economic downturn.

ATG, as well as its rivals BEA, HP, IBM and iPlanet -- an alliance between Sun Microsystems Inc. and Netscape Communications Corp. -- each support Sun's Java 2 Enterprise Edition (J2EE) specification.

Compatibility with J2EE should make it easier to run ATG's applications in competing environments, said Randy Heffner, an analyst at Giga Information Group Inc. in Cambridge, Mass.

"The promise of portability [among J2EE application servers], though not perfect, is pretty good," he said. "It bodes well for J2EE, and [J2EE support] will help ATG sell into customers who don't want another application server."

Heffner said he expects IBM and BEA to make considerable market share gains this year, though it's still too early to tell which vendors will lose market share.

Application pricing on the new platforms hasn't been determined.

Earlier this month, ATG laid off 220 workers and issued an early warning about its second-quarter earnings. ATG expects to post a loss of 17 to 19 cents per share on revenue of about $34 million for the period ending June 30, officials said. ATG's stock closed at a year-low of $3.48 per share last week. It peaked at $126.88 last July.

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More about AMR ResearchArt Technology GroupBEABEA SystemsGiga Information GroupHewlett-Packard AustraliaIBM AustraliaiPlanetiPlanet E-Commerce SolutionsNetscape Communications CorpStruggling Art Technology GroupSun Microsystems

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