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February 7, 2003

As the tide of Web services hype continues to ebb and flow, two major research firms this week published bullish studies on the extensively-covered sector. IDC claimed the market for Web services will top $21 billion by 2007, while rival Gartner's Dataquest unit surveyed what products are making the biggest splashes in the enterprise.

But two smaller research firms, ZapThink.com and Redmonk aren't necessarily in agreement with information the larger firms are offering. They feel the monetary estimates may be conservative and that other vendors will add choice to the market.

In its "U.S. Web Services Market Analysis, 2002" report, IDC claimed Web services will epitomize the fabric of computing in the next 10 years, with an estimated market opportunity of $21 billion though 2007, topping off at $27 billion by 2010 -- in the U.S. alone. While most people think of applications when the buzz phrase Web services is thrown out, this includes software, services, and hardware opportunities.

Anthony Picardi, Ph.D., senior vice president of Global Software at IDC, said his company's forecast shows that Web services opportunities will be distributed unevenly among vendors.

"The software opportunity will peak first in 2007 and then decline as customers build out their platforms," Picardi said. "The hardware opportunity will follow in 2009 and then professional services in 2011. It is important for vendors in each of these segments to understand the current market trends and adoption rates in order to take the appropriate actions that will ensure future success."

The IDC report also found that 5 percent of U.S. enterprises will have completed Web services projects, with 80 percent having some projects in motion, by 2008. The fastest growth is anticipated to come from large manufacturing- and services-oriented outfits, although the market will be dominated by small enterprises as they become adopters by 2007.

ZapThink Senior Analyst Ronald Schmelzer, whose company analyzes XML and Web services technologies exclusively, respectfully disagreed with the approach of the IDC and Gartner reports with respect to Web services.

"Trying to quantify "Web Services" abstractly is akin to trying to quantify the market for "client-server" or "object orientation." They are missing the point. If you truly buy into the notion that Web Services will be an underlying technology that powers service-oriented applications and point-to-point integration solutions, then there is no concept of a separate "market" for Web Services. Rather, Web Services becomes part and parcel of many existing and emerging markets."

Schmelzer agreed, however, that Web services will generate a tremendous amount of financial possibilities -- perhaps even more than IDC has allowed for.

"The $21 billion number is a figure that might be off by as much as two to three times in size, but it definitely illustrates the promise that Web Services holds for a wide range of markets," Schmelzer said.

Redmonk Analyst Stephen O'Grady agreed with IDC's finding that Web services is enjoying momentum and holds many opportunities. Standards development and momentum, he said, has a big hand in this.

"People have focused on the lack of adoption between enterprises, but they're overlooking some of the great work that's being done inside organizations," O'Grady told internetnews.com. He said certain schemas, standards and languages are gaining traction over others. "XML over SOAP and WSDL descriptions are seemingly everywhere these days, and UDDI as an internal registry is a concept that's found some buyers," O'Grady said. "But we'd agree that adoption landscape is varied from vendor to vendor.

Schmelzer had additional issues with the IDC report.

"Vendors and end-users that are looking to size up the opportunity for Web Services should first look to the application of Web Services they are envisioning, not some abstract notion of broad Web Services applicability," Schmelzer said. "Surely, there is opportunity for a wide range of application, service, and infrastructure categories... and an even larger number of opportunities to implement Web Services and SOAs [service-oriented architectures] that have yet to even be imagined. So, while the IDC report gives a good effort to understand the impact of Web Services, the approach of trying to quantify and time the opportunity is at best an educated guess, and at worse a black art."

Page 2: Gartner's study looks at the three most popular platforms...

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