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Holding a management position with BEA Systems these days is a risky proposition. In the space of a single week, BEA lost SVP of advanced development Adam Bosworth and CTO Scott Dietzen, two of its leading visionaries, following the exit of VP of products and solutions Rick Jackson and senior director of marketing Erik Frieberg. It's a game of management musical chairs for those remaining...

Vice president of services Tom Asburn has assumed responsibility for sales and marketing along with services, meaning ex-Microsoft MSDN wunderkind Tod Nielson and vice president of worldwide sales Charlie Ill now report to Mr Asburn instead of chief executive Alfred Chuang.

Mr Chuang is taking a product focus by heading a Product Leadership Team. Rumors, meanwhile, are swirling over the fates of number of vice presidents: Wall Street believes the future of Mr Neilsen and Mr Ill remains uncertain. Lower ranking troops, meanwhile, are dusting off their resumes.

The exact reason for these changes is unclear and BEA is remaining tight-lipped, instead talking of new product priorities and a decision to "harden" WebLogic Application Server 8.1. That in BEA's opinion also accounts for an inevitable loss of staff, as individuals don't agree with policy.

What's clear is BEA is negotiating its way through a couple of tough fiscal quarters. Last week the company pre-announced its upcoming second quarter would see a shortfall of 3% in revenue, 6 per cent in licensing, and 6 per cent in earnings per share.

Although better than expected, the second quarter follows a painful first fiscal quarter during which BEA missed targets, with sales of the WebLogic Platform and WebLogic Workshop proving tougher than hoped. As a result, BEA organized sales in order to better attack Small and Medium Businesses (SMBs) and vertical sectors, while pulling Oliver Helleboid away from products to captain long-term strategy and planning.

At least one partner believes part of BEA's problem is structure and organization. Partners have played a key part in bringing WebLogic to market, yet one partner, who wished to remain anonymous, called BEA's structure "dysfunctional". "It's not very well organized at following through on a commitment. They do 180 degrees on their previous position," he said.

BEA's structural reorganization appears to be an attempt to redress its problems, and better deal with an increasingly challenging climate.

Accompanying sticky performance is increased competition. IBM and Oracle are nibbling away at BEA's application server market share, with Oracle building a slow yet steady third-place position, behind BEA's number two, according to analysts.

Open source is also a growing factor. Products from JBoss substantially undercut BEA's $10,000-per CPU application server, while low- and no-cost competition is proliferating with Java 2 Enterprise Edition (J2EE) application servers from Apache Software Foundation, ObjectWeb Consortium and, as of last week, Red Hat.

With increased competition also comes the threat of acquisition. BEA is number two on Oracle's shopping list once PeopleSoft is completed - with that particularly tortuous case appearing to be reaching some kind of conclusion. Oracle chief executive Larry Ellison, has, meanwhile, made it known to sales staff that their job is to drag down BEA's stock price.

BEA was forged during the heyday of the dotcom boom, fuelled by customer wins and acquisitions. Tough times, though, as denoted by harder sales and increased competition, are calling for tough measures. Whether BEA has acted soon enough, and what impact recent changes will have on the company and its staff, remains to be seen.

Source: ComputerWire/Datamonitor

Related research: Datamonitor, "MarketWatch: Technology Annual Subscription"

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