The application integration software market has grown large – but without any particular ‘gorilla' emerging in the sector. IBM and BEA Systems, with their related strengths in messaging, and in portal and application server software, have tried to grab the lion's share of this market, but the handful of vendors focused exclusively on integration still represent a challenge. Vitria and Mercator, notably, are struggling to rekindle sales growth and profitability.

In the final quarter of its fiscal 2002, Mercator's revenues declined by 13%, but cost cutting over the period had a positive influence on the company's bottom line. A net loss of $60.2 million recorded in Mercator's fourth quarter 2001 was reduced to a loss of $8.2 million in this latest quarter. Suffering from the same market doldrums, Vitria had a similar ride over the quarter. For the three months, revenues dropped 14% to $35.2 million, as net losses soared to $13.7 million from $0.2 million a year earlier.

BEA Systems fared slightly better, with fourth quarter revenues to 31 January dropping by 10%. And although net income fell – from $19.0 million to $10.6 million – it was still positive. At the same time the company's annual revenues at $975.9 million put it in a different league from many of the other integration software players. The company added around 700 new customers during the quarter, though most of these were in the application server sector, which, along with rival IBM, BEA dominates.