After cruising along as $200m/yr companies through middle part of this decade, Vignette and Interwoven appear to be headed in opposite directions financially -- and perhaps in other ways as well.

Kas originally tracked this story last summer and a year ago. Earlier this week, Vignette released preliminary Q4 2008 financial results that indicate a steep drop from Q4 2007, and ominously, a shrinking percentage of license (as opposed to services) revenue. This makes several poor quarters in a row, and the company recently reduced staff by 10%. Meanwhile, Interwoven pre-announced a profitable Q4, with top-line revenues that come close to doubling Vignette's.

What's going on here? On the surface, both companies started out as mirror images of each other: Web CMS vendors who raised serious capital during the dot-com boom, then survived the 2001 bust with enough cash to acquire several other vendors of adjacent technologies, in an attempt to become major "ECM" players.

From there they took different paths. Interwoven acquired some healthy document management and e-marketing vendors, but left them independent to pursue their own markets, even if it meant that customers could not really look to Interwoven for a comprehensive "suite" solution. The company made only incremental improvements to its flagship TeamSite product, but re-oriented it towards higher-end, B-to-C scenarios. Web CMS Report readers know that TeamSite's underlying architecture is ancient compared to Vignette's, but remember that the best technology doesn't always win in the marketplace. Interwoven's rising stock price has enabled it to purchase other income streams, most recently with Optimost.

As for Vignette, after the bust they completely rewrote their WCM product in Java, inaugurating some difficult years for the company and customers alike. Vignette also acquired document management, collaboration, and portal vendors -- all Java-based -- in the hopes of creating a unified ECM platform. At the time, I thought this strategy superior to Interwoven's, but history has proved me wrong. Today a prospective Vignette customer still has to purchase several different products for a complete solution, and with some exceptions, they remain insufficiently integrated.

Of course, you shouldn't select or drop a vendor based on stock price fluctuations, and Vignette's balance sheet remains strong. But I can't shake a nagging feeling that something will happen with Vignette this year...perhaps an acquisition by a larger vendor. For customers' sake, I hope that any suitor would be interested in Vignette's actual technology, and not just its maintenance revenue stream.