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Ellison 'Green' with Envy

Whether or not Oracle wins its hostile takeover of PeopleSoft , one thing is for sure: Larry Ellison is acquisition hungry.

But the motivation for doing so may not be to battle top-tier market leader SAP , but rather to take away mid-market business from Microsoft and IBM , according to analysts surveyed by internetnews.com.

In a video deposition Monday, the CEO said he considered as many as eight different acquisition targets, including Siebel, BEA, Systems, Business Objects, Lausanne Software, Corner Corp, SunGuard SCT, Documentum (eventually acquired by EMC) and J.D. Edwards (acquired by PeopleSoft).

Ellison was interviewed as part of the U.S. Department of Justice's antitrust case against the Redwood Shores, Calif.-based Oracle. The DoJ's stance is that Oracle's acquisition of PeopleSoft reduces the number to just two companies -- SAP and Oracle -- that supply Enterprise Resource Planning (ERP) software designed to help a company run its critical business functions. The trial continues Wednesday with lawyers for Oracle starting their defense of the DoJ's claims.

During its yearlong attempt to pull off its $7.7 billion bid, Oracle has generically pointed to other acquisition targets in addition to and beyond PeopleSoft. San Jose, Calif.-based BEA has made the top of most analysts' "most likely to be acquired by Oracle" lists.

Paul Hamerman, Forrester Research Vice President of Enterprise Applications, suggests Oracle seems to be making Microsoft into a bigger threat than they are for large company applications.

"The mid-market is less mature and lacks market leadership, and Microsoft's Business Division has a strong reseller channel that is well matched to seizing this mid-market opportunity," Hamerman said. "None of these [potential acquisitions by Oracle] would accomplish the same objectives as PeopleSoft, either due to scale or product focus. Lawson is probably the most similar, but much smaller. The company is probably still an acquisition candidate for Oracle. Oracle's acquisition strategy in the future will focus on friendly, rather than hostile, candidates and those, which are more complementary [to avoid regulatory issues]. Oracle may also consider small- to mid-market application vendors not mentioned here, such as NetSuite, Sage or Epicor."

Oracle is expected to call Microsoft Business Solutions Vice President Douglas Burgum to the stand to help settle the question of Microsoft's strategy for the ERP marketplace. Microsoft is in the midst of launching "Project Green": an open, service-oriented architecture (SOA) and a new process-centric design to create a new generation of component-based business applications.

Lawyers with Oracle said their field of questions will certainly include the recently revealed $65 billion merger talks between Microsoft and SAP. Microsoft acknowledged that it initiated preliminary discussions with SAP late last year but has since dropped the issue.

In advance of its opening defense statements Wednesday, Oracle also released a 26-page white paper to the press Tuesday detailing why it thinks its rival in Redmond is a bit more aggressive in the high-end market than people give them credit for.

"IBM, SAP and Microsoft are all competing to be the primary vendor for enterprises," Mike Dominy, director of Enterprise Services at research firm Yankee Group, told internetnews.com. "IBM and SAP are clearly focused on increasing their 'share of IT budget' within large enterprises. Microsoft is focused similarly but on the SMB market. "Oracle needs to grow its customer base and expand its portfolio of products to compete effectively with IBM and SAP," continued Dominy. "Acquiring PeopleSoft enables Oracle to compete more effectively with SAP. Acquiring BEA [would enable] Oracle to compete more effectively with IBM. Acquiring Siebel [would help] Oracle but not as much as acquiring PeopleSoft."

Dominy said there have been rumors that Oracle is exploring acquisitions in the consulting and systems integration space. "This strategy would also help Oracle match up better with IBM," he said.