Highlighting the debilitating effects of consolidation in the market for application server software, a small maker of such products has quietly pulled out of the business and is selling off its technology.
Lutris Technologies Inc. last month stopped offering its application server, called EAS, as well as an open source version of its product, called Enhydra, according to the company's president, Yancy Lind, who announced the news in a posting on a developer Web site last month.
"I am sorry to say that it is true that Lutris has decided to stop selling application servers to end users," Lind wrote. "We will no longer offer commercial versions of Enhydra or EAS."
Additionally, the company has given up managing the open source community that develops products based on Enhydra. ObjectWeb, a member-funded community for open source developers, has since taken over management of the Enhydra open source community, which is online at http://www.enhydra.org.
Dominated by four top vendors -- BEA Systems Inc., IBM Corp., Oracle Corp. and Sun Microsystems Inc. -- the application server software business has undergone a flux in the past few years as customers and vendors re-evaluated the pricing and distribution model for such software.
Lutris, based in Santa Cruz, California, started out by offering the open source version of its software, Enhydra, which meant developers were free to view and modify the source code to suit their purposes. The company planned to compete against bigger vendors by selling a low cost product and by making money from fee-based consulting services.
Initially, Lutris attempted to certify Enhydra to be compliant with the set of standard Java specifications adhered to by J2EE (Java 2 Enterprise Edition) application server vendors. By gaining a license for the J2EE specifications, it would allow applications built for the server software to be tested and branded as compatible with those from competing vendors such as BEA.
However, following a long-publicized debate with Sun, which oversees certification for J2EE products, Lutris failed to secure a license for its open source software. Lutris claimed that it was boxed out of the Java community due to stiff fees for a license, which it argued were too high for small companies trying to enter the market. Currently, 39 companies have licenses for J2EE, according to Sun.
Lutris set out instead to develop a commercial version of the software, EAS, for which it was able to gain J2EE certification.
Thrown into a growing pool of vendors offering low cost application servers, it seems the company failed to shift its business model successfully, according to one analyst who, like many, had been unaware of Lutris' exit from the market.
"They really couldn't compete on price," said Michele Rosen, an analyst with research firm IDC, noting that price was one of its key features.
For example, Hewlett-Packard Co. began offering a version of its application server for free. IBM created a low-cost version of its WebSphere application server, and Sun added its own twist by toying with the idea of bundling it's recently renamed Sun ONE application server as a feature of the Solaris operating system.
Developers building more sophisticated applications also had access to free software available from other open source communities that had no intention of making a business from software and consulting sales. One of those is JBOSS, an open source application server that is not J2EE certified but shares features included in J2EE application servers. Another popular alternative is the freely available Apache Tomcat.
BEA, the leading maker of application servers according to data from IDC's Rosen, has also tried bundling other products with the application server, such as its portal software, she said.
"It really has become such a market that the core technology is almost irrelevant and it's really about all of the services you're getting around it," Rosen said.
Other smaller market share holders, such as Macromedia Inc. with is JRun application server, IronFlare AB, Iona Technologies Inc. and India's Pramati Technologies have gone about targeting regional markets, teaming with big vendors or shifting the focus of their product lines away from application server sales.
"The players who aren't IBM, BEA and Oracle have found an ecosystem in which they'll survive through a relationship to one or more of those players," said Mike Gilpin, research fellow with Giga Information Group Inc. He noted the example of IBM, which allows applications developed with Macromedia software to be deployed on WebSphere.
"The application server is essentially commoditized and it makes it very hard to differentiate products from different vendors," Rosen said. "What you saw in a lot of the smaller companies was a move toward specialization."
Part of Lutris' strategy was to tackle the wireless market, with features targeting wireless applications. However, the plan failed to pan out after the market for wireless products got off to a slow start. "Their specialization attempt didn't really work out," she said.
"One of the other industry trends that we see is what's called the deconstruction of the application server," said Giga's Gilpin.
Some customers don't need to have the whole application server but instead can have lightweight subsets of the server to fulfill specific functions that are required by certain applications, he said. Telecommunication network operators, for example, have situations where they can use stripped down software to solve a specific problem, Gilpin said.
Selling its application server at well below the cost of similar offerings from the top vendors, Lutris attempted to make its money charging for consulting services, but this effort also bottomed out during the downturn in the IT industry. Lutris put a price tag of about $5,000 per CPU (central processing unit) on its software compared to about $35,000 for an enterprise product from some of the leading vendors.
"(Enhydra's) a highly configurable product," said Michael Crawford, a software engineer and consultant with GoingWare Inc. in Santa Cruz, California, who has worked with customers to install Enhydra systems. "Basically they got taken down pretty hard by the dot-com bust. With the dot-com crash all that consulting business dried up."
Now out of the application server business, Lutris last month ditched its public relations firm and its Web site has been reduced to a single page that directs inquires to an e-mail address for its sales department. Calls to the company were not returned.
The company signaled in its April letter to users that it planned to resurrect itself again, though details are murky. "Lutris is going to go back into a development mode and take the significant technology we have developed over the past few years and reposition ourselves in a new market," Lind wrote in his letter. "We have no plans of announcing any of these new products for some time."
The company is also trying to sell the source code it has developed, which provided the backbone for it's EAS application server, as it continues operating in research and development mode, according to Lind's letter.
At least one user of the open source version of Enhydra is in the process of purchasing that code. Jeremy Ferry, an application developer for Internet Exposer Inc. based in Minneapolis, Minnesota, said his company is in discussions with Lutris to purchase the code after early attempts to buy software from the vendor fell through.
"We were in the process of buying multiple licenses for EAS when we found out they stopped selling the software," Ferry said. "We had arranged to buy the application server the day before we got the message."
However, some analysts and users said that there is only a limited market for Lutris' source code.
"I think what they're trying to do is make a lot of money by selling off the source code, which I think would be kind of tough since there's not a lot of demand for it," said Crawford, whose consulting company is based just miles from Lutris' headquarters. "They've done such extremely good work, it's really a shame that Enhydra didn't work for them."