Peoplesoft says Oracle, SAP chief rivals

Spencer Swartz

SAN FRANCISCO: PeopleSoft Inc. considers Oracle Corp and Germany's SAP AG its major rivals, even though the business software maker has also coached its sales staff on "how to beat" a smaller vendor, an executive testified.

The testimony from PeopleSoft's Chief Technology Officer Richard Bergquist came on the second day of the government's antitrust lawsuit to block Oracle's $7.7-billion hostile takeover of PeopleSoft, which it argues would crimp competition and drive software prices higher.

Oracle and the U.S. Department of Justice have squared off in the case over how to define the market for software used by companies to manage their human resources and finances.

Bergquist said the company sees SAP and Oracle as its chief rivals and said that the high-end software market was difficult for new companies to enter because of the financial and technical barriers.

"It took us so long to build the software because you have to build it incrementally, across industries, across countries," said Bergquist, in response to a question from government lawyer, Phillip Malone.

But in cross-examination, Oracle's lead attorney, Dan Wall, pressed Bergquist to square that view of the market with the fact that PeopleSoft had also drawn up "how-to-beat" sales strategies for Lawson Software Inc., a smaller vendor.

"Isn't the reason you have these sales is because you're competing against Lawson?" Wall asked.

PeopleSoft lawyers asked Judge Vaughn Walker to keep the contents from those sales documents from being fully disclosed in open court, saying it would divulge trade secrets.

SOFTWARE COMPANIES, DEVELOPMENT

Bergquist also conceded under questioning by Wall that there was no single, agreed definition of the mid-market for enterprise software -- an area Oracle argues is more vibrant and marked by a number of key players.

SAP is the leading provider of software to manage accounting, sales, purchasing and other business functions at large companies and government agencies.

Oracle, the No. 1 provider of high-end databases and the world's second-biggest software company behind Microsoft -- believes the government's definition of the business-management software market is too narrow because it excludes niche players and leaves out the faster-growing middle market.

Bergquist, one of several government witnesses expected to appear in court over the next several days, said business software products provided by companies like Microsoft and Lawson did not match up to those provided by PeopleSoft, Oracle and SAP.

The government believes Microsoft, the world's largest software provider, has no plans any time soon of entering the "high-end" business software market that caters to multinational companies.

But Oracle lawyers pounced on Monday's disclosure by Microsoft that it had considered a takeover of SAP months earlier. Oracle said the revelations showed the industry is competitive enough to accommodate an Oracle/PeopleSoft merger.

Microsoft said it broke off the SAP talks a few months ago and disclosed the usually secret negotiations because it anticipated the information to be made public in the course of the Oracle trial, expected to last about one month.

Oracle believes Microsoft is edging into the high-end business-management software market and should be counted as a competitor, along with such vendors as Lawson Software.

Bergquist said it took PeopleSoft close to 10 years to build financial management software, due in part to the time it takes to learn about the needs of individual companies.

The Department of Justice's lawsuit, backed by 10 U.S. states, focuses on software that helps big companies manage human resources and finances, known as "backoffice" functions.

© Reuters