To become the predominant player in its industry, the company faced several strategic challenges. IBM, Oracle, and Microsoft posed an increased competitive threat in BEA's core application server market segment. Seeking further growth opportunities, the company was broadening its product portfolio into the integration and portal market segments where it faced strong competition from pure plays such as SeeBeyond, Vitria, Web Methods and others. At the same time, there were increasingly strong pressures to bring all of these pieces together in an integrated "platform" that could be effectively used by corporate software developers seeking to write additional applications or better integrate existing ones, as well as by independent software developers writing major new applications. Top management felt BEA had to win the major battle for becoming the "preferred platform partner" for the high-end enterprise computing market segment. At the same time, a new category of Internet-based "Web services" offered the opportunity to also become a key player in the mainstream – mid-size and small company - market segment. In order to be able to effectively compete with its much larger rivals and to successfully pursue its preferred platform ambitions, top management felt that it needed to carefully formulate and implement a radically innovative product strategy combined with an equally innovative comprehensive distribution channel strategy.
