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Thursday, September 23, 2004PeopleSoft made a brilliant move this week when they announced their strategic alliance with IBM. PeopleSoft is obviously under attack from Oracle. IBM has simultaneously been positioning themselves as the ultimate middleware player via their WebSphere products.IBM's software strategy is to be complementary to enterprise application software providers rather than competitive to them.With one move, PeopleSoft says another "Bye" to Oracle, IBM deeply reinforces their position in the enterprise application ecosystem, and the two companies stir up the enterprise application consolidation pot a little more. The view is that the chaos and uncertainty in the enterprise app market - while bad for customers - is good for infrastructure software companies as the ultimately consolidation plays out - good for our companies that can get in the mix before the music stops .This is seen as a precursor to an acquisition announcement - IBM+PSFT. Then the real consolidation begins - Oracle + Siebel, MSFT + SAP.Oracle, PeopleSoft, IBM, Microsoft, SAP, and Siebel certainly have an interesting chess game going.There is another constellation that we may need to take into account - lot of portal, EAI, Datawarehousing players and ofcourse BEA - how these players would get aligned would have significant influence in the emerging enterpise landscape. .
Jeff Nolan from SAP had this to say at Fred's blog on this topic - I found it really very perceptive - In Jeff's words,"However, I will say that IBM would do well to proceed very cautiously with regard to any consideration of acquiring PSFT given that they derive a huge amount of revenues from their SAP relationship, which for all practical purposes would evaporate the minute they announced such an acquisition . The MSFT-SAP combo was briefly explored but the regulatory hurdles to make such a deal happen are simply enormous and it's not likely that the companies would combine well. I would be surprised if Oracle didn't acquire Siebel, it's a good fit from many perspectives and Oracle needs the CRM apps bad.Finally, with regard to SAP there is very little that can be gained by merging at this point.We're already taking a big % of business away from the other players, the tea leaves favor us staying right where we are while the other companies flail around... we really do look like the adults in the industry. It's really hard to make the case that an ORCL/PSFT combo would be competitive to SAP simply because we already beat both of those vendors even when they are discounting up to 90%, in essence giving away their products for the maintenance and services revenue. Oracle needs PSFT, but only because it stems their slide from #2 to #3 in the market, it doesn't help them beat SAP".
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