By William Fellows
EAI market leader New Era of Networks Inc CEO Rick Adams hired Michael Donaldson from CrossWorlds Software Inc to be his new SVP worldwide marketing not because of Donaldson’s knowledge of the EAI rival but because of his experience in the database market. Adams believes the EAI market is shaping up much the same way as the database market – where the number one driving factor is to avoid picking the loser – and Donaldson was at Informix and Sybase when both companies went public. EAI is set to become a key piece of enterprise infrastructure and Neon is expecting revenues of over $100m this fiscal year. It lost $12.7m on revenues of $65.8m in 1998. Known predominantly for its financial industries expertise, Donaldson has also been brought in to turn on marketing taps in other parts of the industry and the company has its eye on ERP for the coming year. Half of Neon’s last quarter revenue came from non-financial accounts, down from 80% two or three or quarters ago. Its $185m war chest will be used to acquire companies that can give it a leg-up into the ERP space. It will buy companies to get into other geographies – like its two UK acquisitions got it started in Europe – and says other industry and services buys are likely too. It doesn’t yet have the ear of any of the big six integrators like certain EAI vendors do, but says that relationship building will gather pace this year. Neon says that in 80% of customer situations it meets no EAI competition, while it meets pretty much all of the other players in the remaining 20%. Even though it sits at the top of the EAI hill, Neon says it is still too early to determine who will become real players and who are the pretenders the market. The received wisdom of the analyst community in 1998 was that the EAI market had no leader. In Neon it has now, Donaldson says. He points to WinterGreen Research Inc findings which suggest Neon has a leading 18.5% of the EAI infrastructure and message broker markets, ahead of Dialogic with 12.6%, TSI 7.9%, STC 7.7%, Active Software 5.3%, Tibco 4.8%, Healthdyne 3.4% and Crossworlds 2.4% with the rest of the pack below 2%. WinterGreen also suggests that Neon has a 48.3% share of the rules engine market with sales of $37m last year, ahead of Healthdyne with 16.2%, Crossworlds with 11.1% and Vitria with 6.4%. Neon claims to have 750 customers. It says its key technical differentiation is its scalable routing engine, formatter and underlying MQSeries transport. Its declarative formatting architecture in which all messages pass through the Neon engine is juxtaposed with the procedural architecture of TSI Software International whose Mercator suite connects applications directly, meaning, Donaldson argues, that changes to the way one set of application data is handled means every interface in the matrix must be changed. He agrees that the middleware community, including EAI, will consolidate around providing seamless, integrated transaction and internet applications services which are agnostic of platform or architecture but believes the BEA Systems and Iona Technologies still have a lot of ground to cover. So Tuxedo or Corba is there. Now let’s talk about the rest of the world, Donaldson challenges. Neon is currently working on a Corba adapter it will add to its library of packaged application connectors. The adapter merges work already under way at Neon with that of Century Analysis Inc which it bought towards the end of last year (CI No 3,508). Neon’s biggest booster is IBM Corp, which now resells Neon’s MQIntegrator as MQSeries Integrator with the big blue logo. Neon has the option of selling the same product with the IBM or Neon logo on it. IBM sold 20 Neon licenses in the fourth quarter, double what it did a couple of quarters ago. Neon won’t say how much IBM contributes to its revenue stream or what its average deal size is. In addition, Neon still sells its NeoNet suite to users who don’t want MQSeries. It doesn’t currently support Microsoft’s Message Queue alternative to MQSeries. Following all the initial hubbub surrounding MSMQ (Falcon), Donaldson says the technology has pretty much disappeared from anyone’s radar screens, lost he guesses in the effort to get Windows 2000 done. MQSeries has already won the game at the high-end in any case, he argues, although there may be some headroom in the small and mid-markets for MSMQ.