Database administrators that use Oracle Corp. databases probably won't be directly impacted by the company's acquisition of PeopleSoft Inc., but in the long term IT executives will probably welcome the integration and the one-stop shop for databases and applications.
By swallowing applications vendor PeopleSoft, Oracle gains an excellent position in the battle for the IT budget, experts said. The game among software vendors has become consolidation for market dominance.
Oracle CEO Larry Ellison said today that his company is making a cash tender offer to purchase all of the outstanding shares of PeopleSoft for $16 per share, or $5.1 billion. Ellison said Oracle will support PeopleSoft products but will ultimately incorporate the advanced features into future versions of Oracle's E-Business Suite.
Companies today that broaden their base of software and have a more comprehensive suite of services will benefit when the market turns around. Many experts said they believe the market has hit bottom and that there will be a lot of pent-up demand in IT spending.
The early spending will likely be with market leaders, said Hadley Reynolds, director of research at Delphi Group, a Boston consulting firm.
IT executives today are trying to rationalize the number of vendors they need to work with, Reynolds said. "Oracle and PeopleSoft have a tremendous number of joint customers and, now, IT customers will have one less vendor to deal with," Reynolds said.
Database administrators probably won't be affected by the acquisition at all, because companies like PeopleSoft are already well integrated with the Oracle database back end, said Gordon Haff, senior analyst and IT advisor at Illuminata Inc., a Nashua, N.H., consulting firm.
Oracle hasn't had great success selling applications beyond those it has in the financial and manufacturing industries. "Oracle sees databases moving to clusters of smaller boxes, so they certainly will have ongoing price pressures," Haff said. "This is an attempt to kick start some growth in their applications business."
The IT industry is moving into a new phase of the battle for enterprise IT budgets, and the large platform suppliers, SAP AG, Oracle and Microsoft Corp., are jockeying for position. Oracle convincingly owns the repository, but, in the long term, Delphi's Reynolds said, the company will have to offer more of the business value that IT executives are looking to get.
"SAP has built an enviable franchise," Reynolds said. "Oracle has chased that segment of the market for at least a decade without making a lot of headway relative to competition from SAP."
By buying the second strongest player, PeopleSoft, Oracle is growing its footprint, both financially and in terms of expanding its application scope. "Footprint is the name of the game today," he said.
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Are you an Oracle or PeopleSoft customer? How do you think this would affect you? E-mail your thoughts to Margie Semilof, senior news writer