The PeopleSoft acquisition alters the software giant's competitive landscape.
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Oracle won more than a corporate takeover battle when it assumed control of PeopleSoft at the end of last year. It won a battle of attrition in the enterprise software space, and a battle of money and wills over the long-reluctant PeopleSoft board of directors and management team. Having declared its goal to consolidate with a major competitor for front- and back-office technology business, are there any battles the company can't win?
Obvious challenges ahead for Oracle are to prove to its investors that PeopleSoft was worth the time, energy, and money to acquire, and to convince existing customers that PeopleSoft's ability to support and expand installed systems will not be compromised. Competitors, notably Microsoft, have already begun making discount pitches to unsettled PeopleSoft clients, and Microsoft's stronghold in the SMB space is also expected to provide problems for Oracle, which has gained an additional SMB foothold through PeopleSoft's J.D. Edwards purchase. "Oracle has always had a history of contentious relationships with partners.... There will eventually be tectonic plates rubbing against each other when Oracle tries to exploit the SMB business group that it inherited from the PeopleSoft acquisition, and [when] Microsoft tries to move up from those very small companies" to target Oracle's core clientele, says Scott Tiazkun, IDC program manager.
Word began to spread late last year that Oracle may seek another CRM-related acquisition like Siebel, with or without a successful bid for PeopleSoft, but Tiazkun suspects Oracle's next move will be in infrastructure rather than applications, to help it rationalize the spreading range of disconnected products it now offers. "It would make a lot of sense to buy someone in the middleware space... it would make sense for Oracle to be able to offer an [integrated] technology stack," he says.
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