IBM_vs_MS_for_ISVs

IBM J2EE Middleware Platform
White paper
IBM J2EE Middleware Platform vs.
the Microsoft .NET Platform
Which platform should midmarket-focused Independent
Software Vendors (ISVs) choose?
January 2004
PartnerWorld

IBM J2EE Middleware Platform vs. the Microsoft .NET Platform
Page2
The Four Questions Every ISV Should Ask
Midmarket companies are recognizing how technology and the Internet can
help drive major organizational productivity gains by enabling them to react
with speed to any customer demand, market opportunity or external threat.
As a result, these companies recognize the need to automate their businesses
by integrating end-to-end across the company and with key partners, suppliers
and customers. They are not focused on technology for technology’s sake.
Rather, they seek solutions that make better use of existing information and IT
infrastructure and are choosing tailored business solutions that increase
revenue opportunities and drive lower cost structures.
In fact, customer IT decisions, particularly in the midmarket, are application
centric; therefore, Independent Software Vendors (ISVs) that build the applica-
tions for these customers often choose the underlying technology platform on
which the applications will run. With the growth of the Internet, a new
computing model has emerged, shifting computing back towards the central-
ized model found in the mainframe world. Multi-tier or “n-tier” computing
leverages the power of the Internet, allowing users to run applications with
little more than a web browser. The most common n-tier architecture is
three-tier, which is comprised of the client tier, the middle-tier and the back-
end tier. At the top, there is application software, which is the industry specific
market that ISVs target. Processing occurs in between the application software
and the operating system on the middle-tier or what is known as the middle-
ware platform – the software responsible for connecting the two end-to-end.
To harness the power of the Internet, ISVs must choose at least one middleware
platform to deploy their applications, which is why many face both a critical
financial and strategic inflection point today. Financially given limited
resources, many ISVs cannot afford to invest in deploying, migrating and
supporting their applications on multiple middleware platforms. Strategically,
Microsoft introduced its .NET technology in June 2000 as an alternative to
Java. As a result, most ISVs will have to make a critical choice on whether they
migrate their existing applications to deploy to the IBM J2EE based middleware
platform (or other leading Java™ 2 Enterprise Edition (J2EE) vendor’s platform)
or the Microsoft® .NET platform. This decision is a profound one that will force
ISVs to make a choice that will affect every one of their customers’ futures.
2 The Four Questions Every
ISV Should Ask
3 Question #1
6 Question #2
10 Question #3
13 Question #4
17 Summary
18 Footnotes
Contents

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There has been a lot of confusion in the midmarket regarding this platform
choice. The information in this paper is IBM’s attempt to clarify some of the
high-level differentiated business points that an ISV should consider prior to
making a final decision. The content of this paper will help ISVs make a more
informed business decision for their customers as it presents findings supported
by numerous sources, including industry analysts. With the business facts on
the table, ISVs and their customers can decide on the best middleware platform
to choose.
The Four Questions
To help guide the business analysis, four questions will help ISVs fully consider
the business implications of this critical technology platform decision for both
themselves and their end-user customers.
Every ISV should analyze and consider the following four questions before making this
critical platform choice:
1. Should I build on an open middleware platform that integrates seamlessly with
existing IT investments and supports business model flexibility?
2. Should I build on an established and proven middleware platform?
3. Can I afford the potential risk of competing with my partner?
4. What are the short-term and long-term costs of this platform?
Should I build on an open middleware platform that integrates seamlessly with existing
IT investments and supports business model flexibility?
The Value of Open Standards-based architectures
74% of mid-market customers have mixed operating system environments,
while 26% have Windows only. 1
This reality is a result of past “piecemeal”
purchases which have resulted in a collection of multiple applications,
operating systems and computer systems from a variety of IT vendors creating
complex technology stacks to manage. Midmarket partners and customers live
in a heterogeneous IT world; a fact both Microsoft Chairman Bill Gates and
IBM Senior VP and Group Executive Software Group Steve Mills pointed out in
a recent joint Web services announcement.2
Almost every organization uses a
variety of hardware, operating systems and programming languages. As a
Question #1

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result, midmarket ISVs and customers are beginning to realize the real busi-
ness advantages afforded by developing in an open environment. Java is an
open standards-based programming language that allows customers to main-
tain a consistent programming model across hardware and operating system
platforms. The J2EE standard allows software to be written once and run on
any platform. ISVs and customers are not forced to rip and replace their
existing IT assets. Instead, the Java programming language empowers them to
use these existing IT assets, which helps them maximize their current invest-
ments and future return on investment (ROI).
Additionally, an open multi-platform architecture increases an ISV’s and its
customer’s infrastructure adaptability as well as business model flexibility.
Such architectures allow ISVs to avoid lock-in to one proprietary system and/or
vendor allowing ISVs and customers to take advantage of competitive forces and
future vendor invention. For example, ISVs and customers are less vulnerable
to vendor pricing actions when they can choose to work with another leading
J2EE leading vendor because their environment is not proprietary. A J2EE
open standards-based environment allows companies the business model flexi-
bility to choose best-of-breed solutions whenever they desire that are tailored to
their unique industry’s environment. Furthermore, it provides a way for those
who are responsible for technology decisions to predict a certain level of func-
tionality and interoperability from the vendors that they choose to consider.
Essentially, it helps ensure that what ISVs and customers purchase and build
today is viable tomorrow.
IBM Offers Multi-Platform Support & Business Model Flexibility
A J2EE open standards-based middleware platform is designed to enable scal-
able applications to be deployed across multiple hardware and operating system
platforms. As a result, IBM’s middleware supports numerous platforms. For
example, IBM WebSphere® software supports over 25 major platforms today.
This commitment helps enable ISVs and customers to implement their critical
solutions on their hardware and operating system platforms of choice rather
than being forced to switch their solution to another server. IBM’s middleware
platform can help ISVs reach new markets by allowing them to sell to
midmarket customers, regardless of their new or existing customer’s underlying
hardware and operating systems.

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IBM’s J2EE open standards infrastructure not only provides multi-platform
support to help ISV applications become more competitive, but it helps ensure
that ISVs and their customers’ future flexibility is secured and vendor lock-in is
eliminated. Competition among Java vendors yields innovation, while .NET
customers must depend on Microsoft for every new feature. Java opens choices
to many J2EE vendors. Because IBM’s middleware platform is based on this
open technology, development teams can take advantage of best-of-breed prod-
ucts from other vendors supporting the technology. Whether building or
buying applications, it is in every ISV’s and customer’s best interest to insist on
an open standards-based programming language. IBM does not believe in
locking ISV and customer business models. Buell Duncan, IBM General
Manager of ISV & Developer Relations, pointed out, “You can build on .NET
and run applications in a Windows-only environment, or you can build on Java
and J2EE and support Windows, IBM, HP, Sun and whomever.Thisisanoppor-
tunitythat’sallaboutmoneyandeconomics[forISVs].”3
Microsoft’s Proprietary Platform Limits Flexibility and Locks Business Models
As discussed previously, many ISVs and customers consider openness an
important factor in their choice of platform. While Microsoft has participated
in defining open standards in the IT industry through cooperative work on
such things as SOAP and Web services, its middleware implementation of these
open standards is quite different from IBM’s implementation. Microsoft’s
approach leads both ISVs and customers into a closed, proprietary operating
system. .NET is Microsoft proprietary, which limits choice, leads to lock-in, and
leaves ISVs and customers vulnerable to pricing actions and changes in the
programming model. Should Microsoft decide to change its architecture, then
Microsoft ISVs and customers are locked into making additional investments to
stay in line with Microsoft’s .NET technology. Furthermore, ISV developers
may have a difficult time adopting the programming paradigm required by
.NET, that often leads to higher developer training costs.
Microsoft may argue that .NET is open, when in fact it is proprietary. The
Microsoft .NET works on one platform, the Windows platform, which may
require many customers to rip and replace their existing IT assets in order to
create a homogeneous Microsoft IT server environment. This approach may
require adding processors and machines, thus building a server farm that may
require tremendous administrative overhead that midmarket customers may

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not be able to afford to pay. Microsoft’s ability to effectively cover heteroge-
neous environments is weakened as a result.
Microsoft’s latest argument is that openness is not important. “Customers
should resist the emotional urge to avoid vendor lock-in at all costs,” says
Microsoft.4
However, companies that see the value afforded by open platforms
feel otherwise. Midmarket ISVs and their customers looking to reduce risk
should thus favor J2EE. Even Microsoft’s future operating system Longhorn is
seenbysome,suchasTonyMcCuneofZDNet,asanattempttolimitopenstandards,
“Microsoft has never fully supported open standards, and Longhorn will be no
exception. Steve Ballmer says that Microsoft delivers the benefits of open stan-
dards through XML connectivity. However, the company creates new barriers
to true interoperability by promoting Microsoft vendor lock-in. This defeats the
purpose of open standards because Microsoft products are open only as long as
one develops applications on the Window platform—and the same is true for
Longhorn.Thisisnotthecasewithtrulyopenplatforms,suchasIBM’s,whichare
agnostic and run on virtually every operating system and device, from hand-
held to mainframes,” said McCune. 5
Should I build on an established and proven middleware platform?
IBM Middleware Platform is a Proven Market Leader
IBM’s J2EE middleware platform is a solid, flexible and standards-based
foundation on which companies can build and integrate their business systems.
J2EE’s maturity has allowed IBM to provide an established, reliable and secure
market leading platform today. IBM’s middleware platform is not a five to six
year vision. The title of a Gartner report says it all: “IBM Has Top Share in All
Application Integration, Middleware Markets”.6
By partnering with IBM, ISVs
partner with a proven market leader. IBM is a leader in other crucial middle-
ware areas including data management and system management. IBMisa
server-sideexpertwithaprovenplatform.
.NET is Not a Proven Platform
While Microsoft certainly has strengths as a desktop client-side software
provider, its server-side middleware platform is far from established. Server
side requirements are more demanding than desktop requirements and today
Question #2

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the .NET platform trails J2EE in maturity and completeness. To achieve the
.NET vision, users who deploy .NET technology today may need to replace a
series of placeholder products while Microsoft develops .NET over the next
three to four years. In fact, very little .NET technology actually exists, which
Microsoft has conceded. Bill Gates told analysts, “We knew when we did it, it
would be a five –six year effort.”7
There was actually little .NET technology in
the .NET Enterprise Server family. Microsoft has dropped the name “.NET”
from Windows Server 2003, citing customer confusion as the reason. “We
haven’t done the best job being clear on branding,” a Microsoft spokesman said.
“We started slapping .NET on too many products.” 8
IBM “Express” Software Meets Stringent Benchmarks
Unlike Microsoft and its self-admitted overuse of the .NET brand name, IBM is
maniacally focused on ensuring that all of its Express branded software, devel-
oped specifically for the midmarket, meets a very strict certification process.
This certification process demands that a set of stingent benchmarks be met
before a product can carry the Express identifier. These benchmarks and
product criteria include best in class for ease-of-use, simple installation, and
overall ease of ownership, and were developed hand-in-hand with the
midmarket partner and customer community. IBM is demonstrating that it is
truly creating offerings from the ground up to meet midmarket Business
Partner and customer needs by ensuring that Express branded products pass
this strict process prior to release.
J2EE Provides a Smoother Roadmap
With J2EE, ISVs and customers have a more solid foundation and a smoother
technology roadmap. As a result they are able to enjoy a more stable and mature
platform that can avoid disruptions along the roadmap, thus lowering cost.
Pierre Fricke, Exec VP, Web Application Infrastructure, D.H. Brown, said,
“IBM WebSphere is significantly more mature than Microsoft .NET. Microsoft
.NET has only been available since early 2002 as an add-on to Windows 2000
Server and more recently integrated into Windows Server 2003.”
The .NET Roadmap is Rocky
The .NET roadmap calls for Microsoft to replace the old generation of tech-
nology in its enterprise servers with .NET technology over many years. .NET

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was announced four years after Java. The five-to-six-year .NET roadmap Gates
described is critical in understanding where .NET is today and what is in store
for users who adopt the technology. ISVs and their customers will be required
to migrate through a series of servers–a course that will probably cause consid-
erable disruption, complexity and instability. The complications of .NET
development will grow more severe as the server replacements in the .NET
roadmap progress.
As it develops .NET, Microsoft continues to have trouble providing
backwards compatibility for applications. Directions on Microsoft reported
that installed versions of Exchange Server will not run on the forthcoming
Windows Server 2003 because of “fundamental architectural changes” and
that “earlier Microsoft server products also will not be compatible, and some
third-party products will require patches or upgrades.”9
The migrations and disruptions that are dictated by the .NET roadmap run
contrary to data center best practices and the technology transitions are clearly
not as seamless as Microsoft positions them to be. As Directions on Microsoft
analyst Paul DeGroot points out, “Enterprise data centers are particularly
averse to frequent or rapid changes to mission-critical software, which conflicts
with Microsoft’s focus on 18-month cycles between major updates and frequent
intermediate services packs and patches.”10
The same report criticized
Microsoft for caring more about “ship dates than for security and stability,
creating hidden costs and concerns that outweigh, for many data centers, the
benefits of lower prices.” Although Microsoft is making gains, it will “take
years to gain the track record for reliability that risk-adverse data centers
require,” said the report.
Looming on the horizon is Project Green, the new technology platform for
Microsoft Business Solutions (MBS) that has been pushed back to 2006.
Datamation reported, Project Green will necessitate a massive code re-write
that many fear will disrupt the technology strategies of customers, imple-
menters, and developers alike.11
According to industry analysts, most ISVs will
face a strategic inflection point where they will need to choose between an
open, proven J2EE platform that is available today or a platform like Microsoft
.NET platform which is not scheduled to be fully available until 2006.

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Project Green is aligned with Microsoft’s next generation operating system
(Longhorn) which is speculated to arrive in 2006.12
Tony McCune, Director of
Business Development at Crosslogic, a software and consulting firm, points out
how Longhorn will also require a multitude of customer upgrades to implement.
“Microsoft has built its business on a model that forces customers to spend
money on software upgrades every few years. Every successive upgrade restricts
Microsoft’s client base to fewer options and increased dependence on its plat-
form. Even developers are not immune to this upgrade stranglehold. In the next
two years, Microsoft is planning three new versions of Visual Studio .NET:
Whidbey in 2004, Orcas in 2005 and the Longhorn version of Visual Studio in
2006. Each version has a new framework that cannot be used with previous
versions. Developers must continually update their skills, which cost
customers’ time and money.”13
Microsoft Security Problems Add Risk and Cost to Customers
Security is an area in which Microsoft has had considerable and much-publi-
cized problems. Over the past few years, the security risk and cost of patching
security breaches has grown severe. Microsoft has admitted that its products
may not have good security. “I’m not proud,” said Brian Valentine, Senior VP of
Microsoft’s Windows Division, at the Microsoft Windows Server .NET developer
conference in Seattle on September 5, 2002. “We haven’t done everything we
could to protect our customers. Our products just aren’t engineered for secu-
rity.”14
Microsoft’s security problems will continue, according to Valentine.
“There’s no end to this,” he said. “It’s impossible to solve the problem
completely. As we solve these problems there are hackers who are going to
come up with new ones.”15
Despite Valentine’s admissions, Microsoft launched an advertising campaign in
South Africa claiming its software was so secure it would render hackers
extinct. The Advertising Standards of South Africa ordered Microsoft to cease
publications of these advertisements. “The secure software claims are
currently unsubstantiated, the visual representation, which creates the impres-
sion that Microsoft software is secure, is misleading,” the ruling said.16
A year after launching a Trustworthy Computing Program, Microsoft continues
to be plagued by security problems. With its current set of products, as well as

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those planned in the near future, some still feel Microsoft will be unable to
provide what many would deem to be adequate protection. It appears that
Microsoft is encountering difficulty in its attempts to solve security issues as
demonstrated by the increasing number of Microsoft security bulletins.
Microsoft has admitted to sixty-one security breaches—that’s over one a week
since trustworthy computing became Microsoft’s ‘highest priority.’17
According to Directions on Microsoft analyst Michael Cherry, the cost of
patching up Windows computers is diverting money from IT budgets that might
otherwise have been earmarked for new software contracts.18
To combat its
security issues Microsoft has now actually employed a bounty hunter approach
to stop hackers. The firm established a $5 million fund to pay rewards for infor-
mation that leads to the arrest and conviction of those responsible for releasing
malicious code.19
Can I afford the potential risk of competing with my partner?
IBM Does Not Compete in the Applications Market
IBM exited the applications market in 1999. As customers continued to
demand a thriving ecosystem of applications that were specific to their
industry, segment and geographical region, IBM leaders realized that IBM
couldn’t possibly be all things to all people and decided to focus on middleware
and team with industry leading ISVs to deliver solutions. Rather than
competing with ISVs and marginalizing their value or putting them out of busi-
ness, IBM is a trusted business partner. Thus IBM’s ISV partners can more
effectively focus on producing new applications. This commitment creates a
strategic alignment that promotes mutual success, reduces conflict and estab-
lishes a strong foundation of trust. For IBM to succeed, its ISV partners must
succeed as well.
This clear and consistent strategy has been successful for both IBM and its ISV
partners and has been praised by RedMonk analysts James Governor and
Stephen O’Grady. “IBM’s strategy of not competing with business application
vendors is likely to pay significant dividends in the SMB space. While Microsoft
and Oracle both compete directly with potential ISV partners, IBM does not. By
delivering products actually designed to be embedded in packaged applica-
Question #3

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tions, IBM is beginning to build momentum. JD Edwards and PeopleSoft are
standardizing on IBM middleware, as are thousands of other smaller ISV’s
— and others will follow suite given the low price points of the Express offerings,
and IBM’s marketing and technical support.” 20
In the midmarket, thousands of IBM Business Partners are already working to
deliver Express-based solutions. Texas-based Ascendant Technology built a
solution for the Plastic Surgery Center of Hampton Roads, Virginia using IBM
WebSphere Portal Express, WebSphere Application Server Express and Lotus®
Sametime® to provide HIPAA-compliant automated patient registration,
advanced workflow and collaboration capabilities.
“Without the lower entry point of IBM Express software, we couldn’t have
created an IBM solution for the Plastic Surgery Center —we would have had to
go to .NET,” said Blair Hankins, chief technology officer at Ascendant
Technology. “Our medium-sized customers are now discovering that IBM-
based solutions are within their reach. As a Business Partner focused on small
and medium businesses, the design, price and open standards support of IBM
Express offerings provide the building blocks Ascendant needs to deliver IBM-
based solutions.”
According to Dr. Peter Vonu, M.D., F.A.C.S., the Plastic Surgery Center is
becoming more of an on demand medical practice because of its new IBM
Express-based solution. “Our patients appreciate the faster and more private
sign-in process. Without any extra burden on our doctors or administrators, we
also see about 15 more patients a week, which represents more than $250,000 a
year in additional revenue. This solution paid for itself in the first three weeks.”
With the new Express portfolio IBM will further enable its network of 90,000
Business Partners including local VARs, ISVs, systems integrators and consul-
tants to deliver complete solutions to medium-sized businesses.21
All Express
offerings are Business Partner enabled; meaning that Business Partners can
either sell or recommend IBM Express offeringstotheircustomersandreceivelead
passingfeesorotherformsofcompensation.

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MSFT Competes in the Applications Market
According to a CRN article published in September 2003, Microsoft, with its
competing interest has had problematic relationships with ISVs. This friction
has ratcheted up since the company entered the business applications space
over the past two years with its Great Plains and Navision acquisitions.22
Along
with these purchases and its homegrown applications in areas like CRM, many
ISVs are finding themselves in direct competition with Microsoft. An IBM
study completed in 2003 based on IDC market estimates, indicated that
Microsoft is already competing in 18 of 45 solution areas representing almost
50% of the application market opportunity. In fact, Microsoft will invest $10
billion to develop its software offering for small and medium-sized business.23
A September 23, 2003, eWeek article also indicates that Microsoft is aiming to
become a leader in the horizontal business application area while growing into
vertical solutions as part of its goal to establish a $10 billion Microsoft Business
Solutions division.24
The Microsoft Business Framework, based on .NET is attempting to bring all
the disparate Microsoft Business Solutions offerings into a single code base and
data base in two to three years. Microsoft will use shared business logic to inte-
grate key horizontal functions ERP, CRM, SCM, which will severely challenge
the midmarket Microsoft ISV partners that build their solutions on Microsoft
technology. A recent CRN article points out those ISVs that choose to remain
Microsoft partners are being pigeonholed into niche service areas and being
adversely impacted by eroding margins.25
Prior to choosing an IT vendor and
partner, ISVs should recognize that Microsoft could change from a partner to a
major competitive threat overnight. Some ISVs have expressed reservations
regarding partnering with Microsoft due to Microsoft’s actions.
“...We find IBM to be much more of a partner. With Microsoft, it seems more like a ‘we
want to purchase your installed base conversation. Sleeping with Microsoft is like
sleeping with a tiger.” 26
“IBM has assured us that they don’t compete with their partners. That’s reassuring
to a company like ours, that there’ll be an open, mutually beneficial relationship.
With Microsoft, one doesn’t get that feeling. Their move into business apps just
underscores that.” 27

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In a CRN article, Microsoft partners acknowledge that they are wary of the
company’s product plans, which they believe may be competitive with their own
offerings in the future if not now. Many cite an attempt by Microsoft years ago to
recruit ISVs to write vertical capability atop Microsoft Office. That effort failed,
leaving ISVs complaining that Microsoft left them no room to add value.28
Best
Software President and CEO Ron Verni told VARBusiness that Microsoft had
sworn to him several years back that it would not enter the business-applica-
tions market, only to turn around and do exactly that.29
What are the short-term and long-term costs of this platform?
IBM Middleware Platform Provides an Affordable Entry Point to e-Business on Demand
This paper has already covered some of the hidden, long term costs that come
with solutions based on an unproven proprietary platform; however IBM’s
middleware platform is competitive on a short-term basis as well as long term.
The platform provides customers with a generally affordable entry point to
e-business solutions and allows ISVs to realize higher profit margins on their
solution sales. The IBM Express solutions are designed, developed and priced
exclusively for midmarket businesses and include hardware, software, services
and financing offerings. Unlike similar Microsoft middleware offerings, IBM’s
Express offerings include one year of maintenance and support while providing
the customer with the greatest flexibility to leverage existing IT resources.
With Microsoft, customers need to pay money each time they have a question.
Inaddition,customersmustpurchaseaseparatesoftwareassurancepackagetobe
entitledtoupgradesoftheproduct.AllofthisisincludedinIBM’scompetitiveprice.
For example, both the IBM WebSphere Application Server–Express and IBM
Websphere Portal-Express offerings provide per user pricing in order to provide
an affordable price point for midmarket customers.
Question #4
Intranet User $25 per user / 20**(dev’t seat included)
Processor $2,000 per CPU
Add’l Dev’t Seats $400
User $85 per user / 20**
(max 2,000 users)
$135 per user /
20**(max 2,000 users)
Processor $33,300 per CPU
(max 4 CPU per user)
$53,080 per CPU
(max 4 CPU per user)
WebSphere Application Server* – Express WebSphere Portal* – Express – Express Plus
*Prices as of 12/19/2003. Prices subject to change. **Sold in packs of 20

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Competitively Priced Products
IBM’s Express products portfolio are also priced very competitively versus similar
Microsoft middleware offerings as illustrated in the below pricing scenarios.
*Prices as of 12/19/2003. Prices subject to change. Operating system considered a sunk cost
InventoryManagement
Provide support for 50 employees
to inventory management system
plus Internet access for customers
to track order status.
WebSphereApplicationServer–Express
$2,000
• Unlimited users
• Maintenance & upgrade protection
• 1 set of developer tools
• Technical Support
MicrosoftWindows2003Server
$5,845
•Upgradeaccessto50additionalusers
(10includedwithWindows2000Server)
• 1 set of developer tools
• No technical support
Employee HR Portal
Provide access to Human
Resources portal supporting 200
registered users.
WebSpherePortal–Express
$17,000
• 200 users
MicrosoftSharepointPortalServer
$22,749
• 200 users
Business Integration
Provide distributor ability to
execute exchange business
information with small number
of partners.
WebSphereBusinessIntegrationConnect–Express
$3,750
• Gateway & support for 5
partner connections
• Browser based tooling for definition
and management
MicrosoftBizTalkServer2002StandardEdition
$14,997
• Gateway & Support for 10
partner connections
• SQL Server Standard Edition
Basic Commerce Site
Deliver a basic B2B or B2C
e-commerce site, one-processor
license plus pre-production
staging environment.
WebSphereCommerce–Express
$20,000
• Production & staging server
• Database (DB2 Express)
• Developer license
MicrosoftCommerceServerStandard
$26,795
• Production & staging server
• Database (SQL)
• Developer license
PRICINGSCENARIOS*
The Linux Open Source Advantage
Finally, IBM is the leading supporter of the Linux open source movement. By
teaming with IBM, IBM Business Partners and customers can take advantage of
the inherent long-term cost savings afforded by Linux-based solutions and may
harness significant cost savings over proprietary alternatives.

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While Microsoft declared Linux a threat to its future in its 2003 annual report,
IBM invested $1 billion in Linux to back its open source commitment. IBM has
effectively used this investment in numerous areas to assist its partners in
getting educated and enabled to service and deploy Linux-based solutions. This
investment helped to support Linux facilities that are available to Business
Partners such as: Linux Technology Center, Linux Integration Center, Open
Source Development Lab, Linux Porting Centers, Solution Provider Labs and
Linux Competency Centers.
A July 2003 report by the Sageza Group probably best summarizes the Linux
advantagethatIBMBusinessPartnersandmidmarketcustomerscancapitalizeon:
“Relative to rival proprietary solutions, Linux is proving a cost-effective and stable
environment for deployment in Small and Medium Businesses (SMBs) while ISV
support for the desktop, middleware, and ebusiness is impressive and growing.” 30
“Financial personnel should take note that migrating to Linux can afford SMBs
substantial cost savings over proprietary alternative applications, while IT
departments will understand Linux’s increased flexibility as an infrastructure
solution. Linux can be installed on platforms from numerous vendors, which
provides greater flexibility in migration costs while mitigating concerns regarding
hardware vendor lock-in over time. In addition, Linux can also be deployed
on under-utilized or repurposed hardware, thus granting the SMB even greater
flexibility. Similarly, Linux offers increased scalability for important software
applications. Solutions that were once deemed too expensive for the SMB due to the
cost of the hardware and the vendor’s cost to develop the applications on multiple
hardware platforms can now take advantage of the lower-cost structure of the Linux
platform to deliver a new class of SMB solutions at affordable price points. This cost
structure takes a number of forms, including the ability to purchase a Linux license
to be deployed across a company’s IT environment without paying additional
per-server fees. With this and other newly affordable solutions, SMBs can seek to
improve their flexibility, sharpen their competitive advantage, and garner customer
insights once thought unavailable. Linux can provide a competitive advantage to
SMBs that is analogous to what e-business did for SMBs in the early 1990s. This is a
particularly appealing aspect of Linux as SMBs are rightly focused on future growth
potential; migrating to Linux presents SMBs with a broader range of options for
current and future business operations than many other solutions.”31

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CRN’s interview with David Stutz, the star Microsoft developer and ex-general
program manager for Shared Source who quit Microsoft over philosophical
differences, pointed out that Microsoft’s response to the open source movement
has been less than fruitful. The CRN interview quoted Statz as saying in his
letter, “Digging in against open source commoditization won’t work. It would
be like digging in against the Internet, which Microsoft tried for a while before
getting wise. Any move toward cutting off alternatives by limiting interopera-
bility or integration options would be fraught with danger, since it would enrage
customers, accelerate the divergence of the open source platform and have
other undesirable results. Despite this, Microsoft is at risk of following this
path, due to the delusion that goes by many names: ‘better together’, ‘unified
platform’, and ‘integrated platform.’”32
Jupiter Research found in a recent study
that SMBs are turning to Linux and other opensourceproductsasalower-cost
alternativetoMicrosoft’sbusinesssoftware.33
The Open Source Eclipse Platform
IBM’s open standards support goes beyond Linux and J2EE and encompasses
the high growth open source Eclipse platform. IBM donated $40 million of its
software tools as the first step toward founding an open-source organization for
developers.34
Spearheaded by IBM, the Eclipse project is a community of
companies building software to integrate different types of application develop-
ment tools in a single framework, which aims to make developers more
productive by using a wide array of tools in an open environment that address
the entire software lifecycle. Eclipse success has been substantial and it serves
as yet another indicator of continued open source success. The Eclipse organi-
zation has more than tripled in size since it was launched in 2001 and download
requests have exceeded 18 million. IBM shepherded Eclipse into a thriving
community that is now a standalone organization that IBM participates in but
does not own or run.
Developer productivity is also a key consideration for ISVs. As a RedMonk
report highlights, “Another key question is developer productivity. How fast
can apps be developed and how well can different development roles, such as
modelers, scripters and code junkies be integrated? In this area IBM has gained
significant competitive advantage by open sourcing lower level functions, such
as basic software change management and code editing, through the Eclipse

Page17
project. Even IBM has been surprised by the momentum here—hundredsofISVs
andtensofthousandsofdevelopershaveadoptedEclipseastheirdevelopmentenvi-
ronmentofchoice,whichbringsmanynewcustomers.”35
Summary – Make the Right Platform Choice
Answering these four questions helps to better analyze the various aspects of
the critical middleware platform decision. IBM’s middleware platform is the
right choice for ISVs that are building on demand applications, and has obvious
advantages over the competition.
Provides a proven, reliable,
and secure marketing leading
platform today
Allows ISVs to build on a solid
open standards-based J2EE
foundation that provides a
smoother technology roadmap
Designed to enable scalable
applications to be deployed across
multiple hardware and operating
systems platforms
Does not compete in the
applications market
Allows ISVs and customers to take
advantage of the inherent cost savings
afforded by key open source
technologies such as Linux and Eclipse
IBM
Middleware
Platform
Microsoft
.Net
Platform






1
IBM Server Group IT Trends Study, 3Q03.
2
Wall Street Journal, “Microsoft, IBM set standards
pact,” William Buckley, September 2003
3
VAR Business, Buell Duncan IBM GM, Partner
World, May 2003.
4
Microsoft Corp., “Microsoft .NET and IBM: A
Comparison,” July 2002.
5
ZDNet, “Five myths about Wronghorn,” Tony
McCune, November 17, 2003.
6
Gartner Group, “IBM Has Top Share in All
Application, Middleware Markets,” Joanne
Correia, Yefim Natis, Massimo Pezzini, Roy
Schulte, May 7, 2003.
7
Bill Gates, Microsoft .NET Briefing Day, Redmond,
Washington, July 24, 2002.
8
San Jose Mercury News, “Microsoft reels in its .Net
tag,” Kristi Heim, January 9, 2003.
9
Directions on Microsoft, “Applications Require
Updates for Windows .NET Server,” Peter
Pawlak, December 16, 2002.
10
Directions on Microsoft, “Microsoft Aims at the
Enterprise,” Paul DeGroot, December 2001.
11
Datamation, “To Figure Out Microsoft, Keep an Eye
on its Partners,” Joshua Greenbaum,
November 20, 2003.
12
InformationWeek, “Microsoft is Keen on Green,”
John Foley, October 6, 2003.
13
ZDNet, “Five myths about Wronghorn,” Tony
McCune, November 17, 2003.
14
Computer Weekly, “Microsoft: ‘Our Products Aren’t
Engineered for Security,’” September 6, 2002.
15
Ibid.
16
The New York Times, “Microsoft Pulls Ad Found
Misleading,” AP, March 24, 2003.
17
From Steve Ballmer’s keynote at Microsoft’s
World Wide Partner Conference, as reported in
eWeek by Peter Galli, “Ballmer : Security Tops
Microsoft’s Priority List,” October 9, 2003.
18
Directions on Microsoft, analyst Michael Cherry, AP
January 2003.
19
Wall Street Journal, “Microsoft is looking for few
good bounty hunters,” November 10, 2003.
20
RedMonk, “Evolution and Extinction: The
Application Server Market in 2003 and Beyond,”
James Governor and Stephen O’Grady
June 26, 2003.
21
Line56.com, “IBM Expands Express,”
Demir Barlas, October 31, 2003.
22
CRN, “Ballmer, Watson Reassert Microsoft’s
Commitment To Partners, ISVs,” Barbara Darrow
and Steven Burke, September 30, 2003.
23
Reuters, “Microsoft to Pour $10 billion on small
biz,” November 23, 2003.
24
eWeek, “Microsoft to Pour $3 Billion into Office,” by
Peter Galli, September 23, 2002.
25
CRN, “MBS Partners lose CRM Exclusivity,”
Barbara Darrow, July 24, 2003.
26
CRN, “IBM To ISVs: Choose Us , Not Microsoft,”
Barbara Darrow, quote from Van Symons,
President of Clear Technologies,
October 7, 2003.
27
Barbara Darrow, quote from Philip Brittan,
Chairman of Droplets October 7, 2003.
28
Barbara Darrow, October 7, 2003.
29
VAR Business, “Annual Report Card: Marathon
Training,” Carolyn A. April, October 8th 2003.
30
The Sageza Group, Inc., “Penguin Dreams: Can
Linux Help SMBs to Fly?”, Clay Ryder, July 2003.
31
The Sageza Group, Inc., “Penguin Dreams: Can
Linux Help SMBs to Fly?”, Clay Ryder, July 2003.
32
CRN, “Star Microsoft Developer Quits Over
Philosophical Difference,” Barbara Darrow,
Feb. 14, 2003.
33
Computer weekly.com, “SMBs see open source as
alternative to Microsoft,” Stacy Cowley,
July 17, 2003.
34
NewYork Times, “Some I.B.M. Software Tools to
Be Put in Public Domain,” Steve Lohr,
November 5, 2001.
35
RedMonk,“Evolution and Extinction: The
Application Server Market in 2003 and Beyond,”
JamesGovernorandStephenO’Grady, June2003.
© Copyright IBM Corporation 2004
IBM Corporation
Route 100
Somers, NY 10589
U.S.A.
Contacts: James Finnen and Kevin Greene,
IBM ISV and Developer Relations
Produced in the United States of America
All Rights Reserved
The e-business logo, IBM, the IBM logo,
Lotus, Sametime and WebSphere are
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Microsoft and Windows are trademarks of
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