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April 30, 1999

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Subject: FAQ fodder #2
Author: Rubic

FAQ fodder #2 - Hands On

Warning: In msg #12, I provided a short and (mostly) unbiased background about Marimba and the technology they have developed. In this post, readers should probably calibrate their expectations to opinionated.

Also, please be aware that I stopped doing active development with Castanet/Bongo about a year ago -- that's almost an epoch in Internet years.

Shortly after the original product announcements in October 1996, Marimba offered free seminars to showcase their products. I was living in Silicon Valley at the time, so I opted to attend the first available slot. I had already begun to write code based on their freely downloadable trial software development kit.

The main advantage in attending this kind of meeting is that you get to talk directly with the developers. There was a lot of excitement at Marimba because the developers could finally talk about their products. At the time it appeared possible for Marimba to completely dominate the realm of distributed Internet applications.

Note: Marimba allows you to download their tuner at no charge, although you must fill out an entry form. As part of due diligence, a potential investor might consider downloading and installing the Castanet tuner.

Marimba's business model is to give away the tuner and charge a licensing fee for the use of the transmitter. The fee is scaled according to the number of users and the number of broadcast channels.

Netscape

In 1997, Netscape announced that it would embed Marimba's Castanet into their browser, and called the technology Netcaster:

http://cnnfn.com/digitaljam/9704/15/netscape_netcaster/index.htm

Netcaster appears to be shipping as part of Communicator for Windows 95 and NT. Information about Netcaster can be obtained:

http://home.netscape.com/communicator/netcaster/v4.0/index.html

Switch to Enterprise

In the early days, there was an emphasis on popular sites that supported channels: Excite, Gamelan, Corel. I don't know if these sites still support Castanet channels, but if they do, it's no longer obvious.

I visited Marimba's web site recently to write this review. It appears the company has shifted emphasis from horizontal toward vertical applications. For example:

Vertical
- Home Depot (custom design services)
- Bay Networks (Mfg. time-to-market)
- TicketMaster (online ticketing)

Horizontal
- Intuit (embeds Castanet in Quicken 99)

Marimba can charge more per channel by targeting the enterprise sector, but those users are harder to acquire. I was actually expecting the Castanet Tuner to become become a standard part of every Internet surfer's desktop -- the way RealPlayer and Shockware Macromedia did.

I don't count Netcaster as market penetration because it does not add any user visibility to the Tuner. And more importantly, Netcaster will not substantially add anything to Marimba's bottom line. (This is even more serious when you consider that Netscape accounted for 22% of Marimba's 1998 revenue.)

Risks and barriers
(A totally subjective analysis)

1. One product company (Castanet)

2. Customer base (Enterprise management solutions) Enterprise customers are willing to pay more, but Marimba is vulnerable to potential emerging technologies that address the delivery issues, especially if the new technologies are targeted beyond the enterprise (i.e. mainstream use).

3. Competition
For companies looking at a portable, Java-based solution for application distribution and management, I don't think Marimba's Castanet can be beat. Although we did use the threat of switching BackWeb Technologies during price negotiations, I was merely bluffing (sorry, Arthur).

The bad news: Even if Marimba has the best solution, it's quite possible for the competition to intrude. Enterprise managers (a.k.a. pointy hair bosses) aren't always the best judge of the most appropriate technology.

The good news: Once a customer has built an Castanet-based application, Marimba has a pretty tight proprietary lock-in. Unless the customer is willing to abandon a major investment in development effort, he will be stuck using Castanet for the entire product lifecycle. Furthermore, since Marimba controls the client side (Tuner), they are in a position to encourage wink, nudge ongoing maintenance and support agreements.

The final competitive threat: Microsoft (need I say more?)

4. Reliance on sales force
Customer point of view: I have a major prejudice in this regard. It's not just the saleperson per se -- who is doomed to be less technically knowledgable than the (client) engineers -- but techies hate it when software companies don't have published price lists. I know Oracle and most of the other database vendors get by with this, but I don't expect the policy of dickering with your vendor to be sustained indefinitely.

Engineers don't like sales representatives trying to decide what we need (by checking off a bullet list) and how much we should pay. This micro-rant isn't lodged exclusively at Marimba; they just happen to be the company under discussion.

From an investor (or potential investor) point of view, I see high costs incurred for each and every sale. Perhaps the costs are necessary for Marimba's kind of technology.

No. That's not right. If Microsoft can shrinkware Windows and call it an operating system, Marimba should be able to get their tuners and transmitters out into the Internet world. Stop dragging your feet guys, and get this fabulous product out there!

Does anybody appreciate the irony? Here is a company specializing in software distribution and delivery. Why isn't it being delivered to every nook and cranny?

Pure bogus speculation: Perhaps the IPO will raise the capital necessary for Castanet to finally get pushed out to every Internet web developer. In my opinion, this should be a priority. Acquire the the second-most-precious-Internet-resource: developer mindshare. (The first being user eyeballs).

Unfortunately, most Java developers outside of Silicon Valley have probably never even heard of Marimba. Ouch. I don't know if Marimba can build a successful business model based on massive developer enthusiasm, but the alternative appears to be playing to a limited audience. The drawback is that Marimba must spend crucial rollout time educating potential users rather than moving their product.

Lest I end on a sour note, I must point out that Marimba has some intriguing potential that can't be wholly discounted in it's present business model. [And further: What do I know? It's present model may be adequate or even superlative.] For a major Internet company -- AOL or @home, for instance -- the possibility of leveraging Marimba's technology could open up some exciting possibilities.

---
Suggested reading: For a technical perspective of how the technology works, please see Laura Lemay's Official Guide to Castanet. Although slightly dated, it presents the best published treatment of how Castanet actually works. ISDN 1-57521-255-2.

-Rubic