17 June 2004 Microsoft is certain to enter the business applications market, adding to the already stiff competition that exists between suppliers, a senior IT consultant told the ongoing Oracle-PeopleSoft merger hearing in the US.
Testifying for Oracle, Christy Bass, a global managing partner of Accenture, told a federal court in San Francisco that it was “just a matter of time” before Microsoft enters the enterprise resource planning (ERP) software sector. “Microsoft intends to be an ERP-like supplier to the midmarket,” she said.
Oracle, which is appealing against the US government’s decision to block its hostile $7.7 billion takeover of PeopleSoft on competition grounds, believes the prospect of Microsoft entering the fray will be a deciding factor in the case. It also cites other suppliers in the sector, including Lawson Software, as proof that competition is already strong and widespread.
Bass argued at the hearing that SAP is the dominant force in the enterprise application space and so Oracle would still face stiff competition if it were allowed to acquire PeopleSoft.
Lawyers acting for the US government countered that SAP is often more expensive than Oracle and PeopleSoft and is therefore simply not a viable option for many companies. But Bass retorted by saying that SAP – which Accenture often installs and maintains for its clients – is occasionally cheaper than either PeopleSoft or Oracle.
Bass’ evidence led to Oracle’s attorney, Dan Wall, declaring that there is now a significant weakness in the US government’s case.
“The government theory is predicated on the notion that we could unilaterally raise prices, but we can’t do that if we have strong competition against us,” he said. “SAP is a powerful inducement [for Oracle] to behave competitively now and forever.”
One US government witness, Curtis Wolfe, CIO for the state of North Dakota, challenged that notion.
He said he chose PeopleSoft over Oracle after both software companies cut their prices by almost half during a bidding competition. “I don’t believe we would have seen that kind of price competition if we hadn’t had the head-to-head competition,” argued Wolfe.
The court hearing, which is being heard by US District Court Judge Vaughn Walker, opened on 7 June 2004 and is expected to last for three weeks.