CRN Interview: John Swainson, IBM

John Swainson, general manager of IBM Software Group's Application and Integration Middleware Division, is in charge of IBM's hugely successful WebSphere software brand. Swainson recently spoke to Senior Editor Elizabeth Montalbano about IBM's midmarket push with WebSphere Express, as well as the competitive landscape for Java middleware.

CRN: Do you have any plans to extend the per-user pricing of WebSphere Express software to other WebSphere products, or will you just continue that model with more Express products?

SWAINSON: We'll have more Express products, [which] were priced in a more flexible way in part to give smaller customers the ability to get started earlier. Interestingly, that doesn't necessarily mean cheaper. If you scale to hundreds or even thousands of users, it's actually cheaper to buy the product in a conventional sense. If you're a small business and you don't know what your usage is going to be or you think your usage is going to be minimal, then we needed an offering that would allow people to address that. We try to make our products appropriate for the market in which they compete. And clearly for small and midsize businesses, you need an offering with a lower starting point, which is why we went with that variable cost model.

We'll have Express versions of our [WebSphere] Commerce offering, for example, which will be aimed again at this marketplace that's very entry-price-sensitive.

CRN: When will that be available, and when will other products follow?

SWAINSON: Later this year. I don't really want to commit myself quite yet [to a launch date]. My only point is that you're going to see a lot of flexibility in pricing, particularly in the low end of the market, because we're trying to make sure that there are no impediments for customers to start using our technology.

CRN: Will there be different pricing models for all of the WebSphere software?

SWAINSON: Not at this time. Obviously, in some large deals, we price very flexibly in special bid environments, but in general, we think the customers are telling us right now that they want to focus on predictability and total cost of ownership.

CRN: Is there any kind of analysis to show that you're winning against Microsoft in the midmarket with Express?

SWAINSON: We've had a couple of hundred [midsize] and small ISVs participate with us. All of those, frankly, might have been Microsoft [partners] had we not had an offering in this space. So they range from [companies such as] J.D. Edwards and Lawson all the way to [companies that] are lesser-known household names.

CRN: What do you think of Oracle's new application server pricing [$5,000 per CPU for an enterprise-scale product], which seems to be trying to undercut WebSphere's enterprise play?

SWAINSON: Oracle tried everything in the book to get [the company] established in the app server market. It's not clear to me that this is any more credible than their previous attempts. The fact is, they actually have been trying to give their products away and have not had a huge amount of success. So it's not clear to me that charging $5,000 for a product no one wants is going to be any more useful. Let's face it. If someone wants a cheap Web app server, they can go get [open-source application servers] JBoss or Tomcat and be perfectly happy. So if I was looking for something cheap, why would I buy Oracle's app server?

CRN: Well, Oracle is trying to offer an application server with enterprise functionality at a lower price than IBM or BEA [Systems], and with more functionality than Tomcat or WebSphere Express.

SWAINSON: Oracle has no credibility in this space. They've tried everything; this is their latest gambit. They'll undoubtedly convince some number of dedicated Oracle customers to buy it simply because they include it in the deal, but I'm not seeing much take-up on it. I think this latest round just illustrates their desperation.

Announcing now that they're going to give it to BEA customers is an interesting strategy. It does tell you that they think BEA's customers are probably susceptible because they tend to have more lightly used systems and therefore will have an easier time converting.

[But you'll] notice they haven't tried the same with [IBM's] customers because they know that our customers are using these systems in ways that they don't have a competitive alternative for.

CRN: I would argue that BEA has a lot of enterprise customers,not just those with lightly used systems. I think Oracle is going after BEA customers [with a] Sun [Microsystems] infrastructure [and] probably an Oracle database.

SWAINSON: To be honest with you, I don't think anybody that's using BEA for a heavy-duty application is going to be particularly attracted to this deal. They're going to be people who are using a little bit of app server on top of an Oracle database, with very light usage of the app server.