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SAP makes DOJ opposition official

SAP plans to write to the Justice Department to protest the agency's opposition to Oracle's proposed takeover of PeopleSoft. Microsoft, however, may have hurt Oracle's chances to outfox the feds.

Citing serious competition from smaller vendors and overseas companies, SAP plans to write a letter to the Department...

of Justice protesting its opposition to Oracle's proposed takeover of PeopleSoft Inc. SAP's letter will reject the notion that the deal would eliminate competition in the enterprise software space, as the Justice Department has asserted.

At the same time, Oracle Corp. apparently has had to cross Microsoft off its list of possible –- albeit unlikely -– supporters in its battle with the Justice Department, which filed suit late last month to stop the takeover.

What I think Dr. Kagermann is trying to do is remind the DOJ how stupid they are -- in a very polite way.
Joshua Greenbaum
analystEnterprise Applications Consulting

According to a report by the Reuters news service, Microsoft executives told Justice Department investigators that the company would not compete in the enterprise applications space within the next two years. That sworn testimony contradicted Oracle's argument that Microsoft is a real player in the space. Oracle is attempting to prove that the market is not dominated by only three vendors: Oracle, PeopleSoft and SAP.

"The market is so broad and geographically diverse," said SAP spokesman Bill Wohl. "We do have something in common with Oracle -- and that is because we don't believe the software market is made up of three companies. We know better."

However, SAP is quick to point out that it is not on Oracle's side. Indeed, the company has repeatedly said that it has no opinion regarding Oracle's acquiring PeopleSoft -- and that it's only taking a position on the health of the enterprise applications space. CEO Henning Kagermann last week told reporters about his plan to petition the Justice Department.

"What I think Dr. Kagermann is trying to do is remind the DOJ how stupid they are -- in a very polite way," said Joshua Greenbaum, principal analyst at Daly City, Calif.-based Enterprise Applications Consulting.

Greenbaum said he agreed with Oracle's assertion that smaller ERP vendors provide healthy competition for SAP and Oracle. Companies such as Lawson do beat out the larger vendors, Greenbaum said, and he pointed to the fact that a large, global sporting goods store recently chose SSA over SAP and Oracle.

The saga has made allies of SAP and Oracle, two companies who compete fiercely. Their rivalry has been defined by Oracle's recent push into the applications space, and highlighted by SAP co-founder Hasso Plattner having once mooned Larry Ellison while the two were competing in a yachting race.

While SAP's position may help Oracle fight the Justice Department, Microsoft may have hurt Oracle's argument.

Citing an unnamed source, Reuters reported that Microsoft executives told investigators their company would not provide viable competition for Oracle and SAP in the enterprise applications space within the next two years.

Market projections and trends

SAP news roundup


To anyone who has followed Microsoft's recent movements into the customer relationship management (CRM) space, or watched the company compete for business applications customers, that news may have come as a surprise. Last week, attorneys for Oracle said they were hopeful that Microsoft's testimony might help their case.

An attorney for Oracle did not return a phone call yesterday.

If SAP and Oracle make for strange bedfellows, then Microsoft and Oracle are an even odder couple. Oracle CEO Larry Ellison, in his zeal to help the Justice Department win its landmark suit against Microsoft, once sent a detective to search Microsoft's trashcans. And, currently, Oracle is lobbying European officials to regulate Microsoft overseas.

Now it's possible that Microsoft may return the favor, if indeed the Justice Department draws on Microsoft depositions.

Although the ongoing legal battle over Oracle's $9.4 billion bid for PeopleSoft has been compared to a soap opera, and has played out against a backdrop of big egos and old grudges, Greenbaum said the IT community should know that much is at stake -- including Oracle's chances at succeeding in the business applications space, where PeopleSoft has a strong foothold.

"People think this is a clash of egos," Greenbaum said. "Oracle is deadly serious. They are going for the gold here."

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