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Oracle's challenge to SAP

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CIOL Bureau
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By Spencer Swartz

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CALIFORNIA: Oracle Corp. plans in a few years to combine Oracle and PeopleSoft business software products in a challenge to market leader SAP AG Oracle Chief Executive Larry Ellison said on Tuesday.

Ellison also said Oracle will not buy another company until it has successfully integrated its $10.3 billion purchase of rival PeopleSoft Inc.

"We'd be foolish to take on another company until we have proven that we had successfully completed the (PeopleSoft) integration," Ellison told reporters at the company's headquarters, where Oracle formally laid out its PeopleSoft integration plans to analysts and customers.

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Ellison said that in three to four years Oracle would make a product combining the software of Oracle and PeopleSoft, which Oracle bought earlier this month after a contentious, 18-month takeover battle.

"I think SAP is going to have to respond to what we're doing," Ellison told a packed conference hall.

His comments were his most detailed yet about the challenging process of integrating the two companies since the agreed takeover of PeopleSoft was announced in December.

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Ellison said Oracle would build the merged product while also supporting thousands of existing customers of PeopleSoft and J.D. Edwards, which PeopleSoft bought in 2003, and building new products for those customers until 2013.

Analysts have said maintaining those customers is vital to the success of the takeover because of the rich annual revenue they provide in paying for maintenance, which gives them access to things like software upgrades and 24-hour support services.

SAP, INTEGRATING CULTURES

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Ellison said Oracle would not force customers to switch from PeopleSoft or J.D. Edwards' products, and he forecast Oracle would keep about 95 percent of PeopleSoft's customer base as a result of support.

Ellison said he believed Oracle could afford to support PeopleSoft and J.D. Edwards customers, build new products for those customers and build a merged product at the same time.

Oracle, the No. 1 maker of databases, believes its purchase of PeopleSoft will help improve its smaller but struggling business software applications business, a market dominated by Germany's SAP. These software applications help companies automate and manage business functions like payroll.

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Ellison said Oracle's combined software, dubbed a "standards-based" product, would challenge SAP's proprietary software products by operating on a more neutral, Web-based technology platform to enable easier integration with other software.

"If they want to turn this into a technology war, then that's a war we want to fight," Ellison told reporters.

Oracle announced last week it was maintaining about 3,000, or about 90 percent, of PeopleSoft's development and support staff. Oracle will have more than 8,000 application software developers with the takeover.

Ellison said Oracle continued to look at other software companies it could buy in the future.





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