IBM last year continued closing in on BEA's lead in the sizzling application server market, according to a study released Monday. In 2000, BEA captured 18 percent of the market in terms of revenue, or $394 million, while IBM was second with 15 percent, or $337 million. Note that these numbers are in terms of revenue, not # of servers sold.

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NEW YORK, July 9 (Reuters) - International Business Machines Corp. last year continued closing in on BEA Systems Inc.'s lead in the sizzling application server market, according to a study released Monday.

The study by research firm International Data Corp. said that in the overall market for application servers -- software used as a foundation to applications -- BEA's WebLogic application server and IBM's (NYSE:IBM - news) WebSphere pulled away from the pack.

In 2000, BEA captured 18 percent of the market in terms of revenue, or $394 million, while IBM was second with 15 percent, or $337 million.

''Those are really the two leaders,'' Steve Garone, IDC vice president of application development and deployment research, told Reuters. ''There was a close-knit group of four vendors in 1999 -- BEA, IBM, SUN and Oracle. At that time, we were saying this was basically a horse race. They were basically all standing on the starting line. In calendar year 2000, IBM and BEA have pulled a head.''

Sun Microsystems Inc.(NasdaqNM:SUNW - news) was third with 8 percent, or $175 million and Oracle Corp. (NasdaqNM:ORCL - news) came in a close fourth with $172 million, or 7.9 percent, according to the study.

Although No. 2, IBM has been steadily catching up. In 1999, BEA had a market share of 12.9 percent, while IBM had 9.8 percent. But a year earlier, BEA's share was about 4 percent and IBM's was about 0.4 percent.

''The net result here is that IBM is not No. 1,'' he said. ''But it does show them catching up.''

While growth in the application server software platform market was expected to moderate in 2000, it instead got stronger, according to Framingham Massachusetts-based IDC.

''It's difficult to overstate the significance of this growth rate,'' Garone said. ''When a market reaches the level of maturity that the ASSP market reached in 1999, annual growth usually slows, not accelerates.''

In 2000, the application server market grew 128 percent to nearly $2.2 billion in revenues, topping 1999, when the market grew at 110 percent to $957 million. Last year, BEA grew 220.3 percent, while IBM's growth rate was 258.2 percent.

IDC forecast the market would continue the strong growth pace through 2005.

Garone said the study also showed early signs of a trend in which application software buyers stayed with makers who have supplied them with other technologies.

''We're seeing some very early signs that there is a platform alignment going on in the app server market,'' Garone said. "We're seeing a tendency for people who have have shopped IBM to go with with WebSphere, Oracle-centric people to go with oracle and there's a lot of Sun people leaning toward Sun.

"Vendors that are not platformed aligned, like BEA, like SilverStream are at some risk because of this.

''It's an early trend and we're not saying there aren't ways to to counter this,'' he added.

The study also showed the application server market continues to consolidate. Last year, Germany's Brokat AG bought Gemstone systems, Hewlett-Packard Co. (NYSE:HWP - news) purchased Bluestone -- one of the founders of the application server market -- and Allaire merged with Macromedia Inc. (NasdaqNM:MACR - news).

''If you're not one of the top vendors in this market, you're either going to get acquired or specialize,'' he said.

Some will specialize around a technology, such as wireless systems. Others will follow Sybase Inc. (NYSE:SY - news) example and serve a particular industry.

Lastly, the entire industry is standardizing on the Java programming language in part to collectively deal with Microsoft Corp. (NasdaqNM:MSFT - news). The world's No. 1 software maker embeds the functions of an application server into the Windows operating system.