As news of the Seagate debacle rocked confidence in the computer industry, analysts said Irish company Iona Technologies' latest product would significantly increase its growth potential.
Iona will now compete directly with leading software companies IBM, Oracle, Digital, Sun Microsystems and Microsoft, following this week's launch of a new off-the-shelf package.
Iona already controls 60 per cent of the world market for object middleware software and analysts have hailed the latest development - OrbixOTM - as a major advance.
"There is nothing the OrbixOTM can't encompass. Anyone can get fully integrated with these products as it covers all computer languages. It is the "full monty" in one," says Mr Enrique Curran, equity analyst at NCB Stockbrokers.
"Expanding the product portfolio creates enormous growth potential for Iona. Add-ons to the core product will ensure success, like the difference between a standard car and one with alloy wheels and electric windows."
Mr Curran says Iona's closest competitors, Visigenic and BEA Systems, are one year behind in terms of technological expertise.
Iona's turnover next year is forecast to grow 80 per cent to £74 million, according to Goodbody Stockbrokers. A listing on the Dublin Stock Exchange is expected before Christmas once the paperwork can be cleared on time according to Iona's chief executive Mr Chris Horn.
The original Orbix product solely provides software integration solutions. Combined with an Object Transaction Monitor (OTM), OrbixOTM enables disbarred operating systems to work together for the first time. Mr Curran predicts Iona's earnings next year will increase at a higher rate than turnover as it gradually shaves off its R&D and administration costs. "As the sales mix moves increasingly towards products, gross margins will improve at a rate higher than in the services division. This is because it costs so little to produce the products," he says.
The services revenue growth rate currently stands at 40 per cent, but Mr Curran believes this is artificially high, and expects it to fall to 30 per cent.
Goodbody says the latest developments at Iona are a direct response to problems that have arisen out of rapid growth and a stock market listing. The shareholder base had to be balanced between the US and Europe recently, after the Nasdaq listing led to volatility in the share price. There has since been a conscious shift to more institutionally-based European interests, accounting for 20 per cent of the free float.
In a separate development, the sales effort in continental Europe had to be increased considerably after it was found that Iona products were not selling outside the US at the rate they should.
The appointment of Mr Noel Toolan, the former Bord Failte executive, to head the product's marketing drive is viewed in the industry as another strategic move by Iona. He will head up the marketing of OrbixOTM in the US.
