Web Services Shakeout

News.com surveys the market:

Now, a glut of Web services management companies are competing to be part of Web services applications that are becoming increasingly popular within big companies. Many smaller, specialized management tool players, like Infravio and AmberPoint, could be on a collision course with industry heavyweights that are now intent on being full-service providers.

Other established companies in the field include Confluent Software, Digital Evolution, Flamenco Networks, Actional and Blue Titan Software, each of which focuses on specific areas of Web services, such as delivering messages or monitoring Extensible Markup Language documents.

Analysts say the market is in such a state of flux, it’s unclear which of those companies have the best long-term prospects, given all the variables, including management, funding and customers. Managers of those start-ups expect that two or three will survive an anticipated shakeout. Analysts say those companies that do survive will need to stay several steps ahead of established companies, as they muscle into Web services management.

“We definitely see (that) 2004 will be make-or-break for all new entrants,” said Jason Bloomberg, an analyst at Web services research company ZapThink. “A couple of those (management) companies might survive, but five years down the road, they will be different companies.”

For Web services start-ups, “what’s critically important is not the technology as much as the customer acquisition,” said Martin Wolf, president of investment firm Martin Wolf Securities, who expects the field to thin out substantially during 2004.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.