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.
