Is Oracle Giving Siebel A Run For Its Money?

Can Oracle make eCRM work by giving it away?

Perhaps but analysts are cautious and several say Siebel, the undisputed leader in electronic Customer Relationship Management applications, has nothing to worry about despite a little investor concern.

The market hiccuped on the news that Siebel Systems Inc. will face some competition from Oracle Corp. in the Sales Force Automation (SFA) market, but Siebel shares were rebounding today after several analysts in essence said not to worry.

Siebel closed yesterday at $167, down 2.9 percent, after declining to as low
as $156, but shares today were upticking in the $172 to $173 range at
mid-day. Oracle meanwhile was up several dollars at mid-day.

The source of investor concern was a report that Oracle, the largest
database-software maker, is planning to offer the online sales-force
automation service next week for free via a new operation,
hoping to get clients to buy its full package of eCRM software down the road.

Oracle’s new OracleSalesOnline.
operation reportedly has been in beta for several months. The site is
expected to launch next week with 300 to 400 users, including Compaq, Bank One Corp., Veritas Software Corp. and Hewlett-Packard Co.

Siebel, run by Oracle’s former top salesman, Tom Siebel, is the No. 1 maker
of such software, which helps companies to track sales and develop leads.

Yesterday’s investor concern was prompted in part by comments from Lehman
Brothers analyst Neil J. Herman, who was quoted by Bloomberg News as saying the Oracle move could impact competitors. “Oracle is giving away the first dose for free and
then charging once you’re addicted to the results,” Herman wrote.

This morning, Goldman, Sachs & Co. analysts disagreed on the
impact, saying essentially that Oracle was expected to compete more with
Siebel and the “market is unpenetrated,” accommodating more than one vendor.
“We view this news as having (a) minor impact on market dynamics near-term,”
GS said in an advisory.

Goldman, Sachs went on to say that Oracle will gain some visibility with its
price- aggressive marketing tactics, “which will help in gaining more
traction in the CRM space.” However, Siebel “has built an impressive customer
base with significant revenues from its SFA solution and the company offers
strong functionality advantages.”

Gartner Group analyst Michael Maoz told that Oracle’s will likely come in a “a day
late and a nickel short.” “It’s still too expensive for most enterprises
because you get minimal sales automation capability,” he said.

Prudential Volpe Technology Group analyst Steve Abrahamson still rates Siebel
a strong buy, adding that “I don’t consider (Oracle) a real threat to Siebel right now.”

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