Oracle vs PeopleSoft

by Courtesy Mariantic on 27 Sep 2004 This is a strange place to discuss the ongoing battle between two of the world's largest software companies, but the disputed takeover and counter-claim for damages is now about to extend to the America's Cup.

Whilst a lot of this article is true, most of it is rendered irrelevant by Sausalito Challenge revealing today (Sep 22) that their ‘sponsorship’ from PeopleSoft is a one week ‘Sailing Billboard‘ promotion in San Francisco in conjunction with PeopleSoft's annual week long symposium held at the Moscone Center.

We feel that John Sweeney gave the impression to the world press that the challenge had a sponsor for the 32nd America's Cup. The announcement on the Challenge Series website will disappoint many and anger some. It will also delight the detractors who have, from the beginning, said this challenge was a fantasy.

We have (had) a heap of goodwill for this team but, sorry, we are losing patience. This is NOT the innovative, professional approach their website claimed was what set them apart. Even if there does turn out to be a real deal here, they have alienated at least two fans (mariantic) and probably many more.

Perhaps we just don't share John Sweeney's sense of humour. Anyway the rest of the story can stay for a while - it took a lot of work!
Another development which may have some significance is this:-

‘SAN FRANCISCO, SEPTEMBER 22: Peoplesoft Inc will push ahead with a new marketing alliance and other initiatives in the face of a court ruling that raises the chance that Oracle Corp's $7.7-billion hostile takeover bid could succeed, PeopleSoft's Chief executive said on Tuesday.

PeopleSoft CEO Craig Conway announced that PeopleSoft and computer giant International Business Machines Corp had struck an agreement that would involve the two companies jointly selling their products and investing around $1 billion over five years in joint research ventures.‘

Oracle, of course, is not just a sponsor of BMWOracle Racing. The team is the personal creation of Oracle CEO Larry Ellison. Some have said he has the America's Cup obsession in the manner of Sopwith or Bond, We are unconvinced of that, but he certainly is a seasoned big-boat campaigner and a person who works notoriously hard at his leisure and pleasure.

Oracle, the company, is strange. We are told it is Microsoft's big rival. In fact it is not.

Everyone seeing this page has some Microsoft software on their computer - a miniscule number will have anything by Oracle. They are in completely different markets running different business models. Both companies have created powerful database engines Microsoft ‘give’ theirs away as part of the server operating system, Oracle charge big bucks to big companies.
Big companies actually LIKE to pay big bucks.

It gives them a warm feeling about software that forms the vital infrastructure of their organizations. Oracle not only charges lots, it sells big-business oriented add-ons that are designed to replace in-house legacy systems and to give rapid ROI.

In this area of ‘Applications’ Microsoft have never (yet) trodden. The other big players are SAP and PeopleSoft. Between them these companies dominate Financial and Human Resource applications software.

SAP has become the software of choice for all large corporation accounting and finance. Any company who is still sitting with their legacy accounting system is receiving pressure to conform, not just from SAP's marketing but from their own auditors. Of course, SAP were big on the sails of TNZ in 2003 but have not placed themselves for 2007. Watch this space.

Back to PeopleSoft. With SAP too big for acquisition, Oracle eyed up PeopleSoft as a way of further expanding their application business. PeopleSoft opposed a takeover but Oracle bid $7.7 billion for their shares in late 2003. Such an acquisition would make Oracle huge in the application market and anti-trust legislation was expected to prevent it.

However, in early September 2004, a Federal judge in San Francisco ruled a takeover wouldn't violate antitrust laws. The takeover still has to clear European Commission anti-competition regulations but a similar ruling is not unlikely given the opposing market position of SAP. (By the way, rumours persist that Microsoft is eyeing up SAP as an acquisition. Now that would be interesting...)

PeopleSoft are still fighting and have launched a $1 billion damages case against Oracle claiming unfair business practices during the buyout offer. There seems little doubt that the threatened takeover caused hesitation and concern in PeopleSoft's customer base and in new clients.

PeopleSoft's second-quarter 2004 profit dropped 70 percent, and the company said in July that it won't meet its profit and sales forecasts.

So, will this dispute extend to the America's Cup? It seems that PeopleSoft are close to announcing sponsorship of the Sausalito Challenge. That is their by-line Photoshopped onto the hull of John Sweeney's ITA1 on the splash page. (A few years ago PeopleSoft was one of the companies using Sweeney & Tina Kleinjan's ‘Sailing Billboards‘ as promotion around San Francisco Bay. Sailors, don't look too close at the sail shape in the pic, these boats had big diesel engines - the sails were literally billboards!)

There are several scenarios that could be played out here; Oracle could meet PeopleSoft as competitors in LV Acts whilst in fierce litigation in the courts.

Alternatively PeopleSoft could be a brand of Oracle, following a successful takeover, and Ellison could double his shot at the cup. In either case it is unlikely that anything will happen this year. Surely Sweeney & Kleinjan couldn't get a boat to the start of Act 2, could they..? (Nope)

By Act 4 (June next year) the EC could have ruled and the litigation could be over (the case has been postponed until January 10 2005), the takeover could have happened or the offer been withdrawn. In either case PeopleSoft will have had public exposure out of proportion to their contribution, which is the idea anyway isn't it?
Interesting times.

http://www.mariantic.co.uk/ac/six.htm#10or12