Oracle's Bizarre Software Triangle

Ask most lawyers and they'll tell you that stunning courtroom revelations are reserved for TV writers. But there are rare exceptions, like the trial to determine whether database king Oracle (Nasdaq: ORCL  ) can legally pursue its proposed $7.7 billion buyout of business software maker PeopleSoft (Nasdaq: PSFT  ) .

Already the brouhaha has brought news that Microsoft (Nasdaq: MSFT  ) was once in talks to buy business software leader SAP (NYSE: SAP  ) . And then it was revealed that Oracle's prospective shopping list also included BEA Systems (Nasdaq: BEAS  ) and longtime rival Siebel Systems (Nasdaq: SEBL  ) , among others.

Yesterday, the parade of entertaining testimony continued when a senior executive from SAP took the stand to testify that if Oracle's deal for PeopleSoft were to go through, competition in the business software space would intensify. Uh, yeah, OK. On this issue, SAP has about as much credibility as Baghdad Bob.

Indeed, what makes this trial so entertaining is that the so-called revelations aren't really revelations at all. For instance, was there ever any question that Microsoft wanted to be competitive in business software and land the same kinds of clients that Oracle, PeopleSoft, and SAP all crave? Of course not.

And, really, does it surprise you that SAP would claim Oracle's bid would make the market more competitive? It shouldn't. I haven't been behind the government's case against Oracle, but this is one area where the Feds are right. A smaller market would, over time, confer pricing power to the top players, including -- yep, that's right -- SAP.

It seems to me that the Microsoft-Oracle-SAP bizarre software triangle, like all such relationships, makes for steamy headlines that distract from the issues at hand. What's the big picture here? The government's case is predicated on the idea that Oracle, PeopleSoft, and SAP are it when it comes to supplying the software companies need to run core operations. That's a narrow view, and doesn't seem provable, especially in light of yesterday's spectacular opening for shares of Salesforce.com (NYSE: CRM  ) . Salesforce.com hosts business software over the Web, reportedly making it less costly than the Oracle-PeopleSoft-SAP approach to running critical business functions.

Think Salesforce.com Chairman and CEO Marc Benioff, one of Oracle CEO Larry Ellison's former proteges and, also like Ellison, a fierce competitor, would testify that the business software market would be all but sewn up with an Oracle-PeopleSoft merger? Exactly.

Can't get enough Fool coverage of the Oracle-PeopleSoft pandemonium? Check these out:

  • Tom Taulli reports that Microsoft wants a piece of the global enterprise resource planning pie.
  • I've said Oracle and PeopleSoft could both use some owners.
  • And I wouldn't mind seeing OracleSoft.

How much is really at stake in the Oracle-PeopleSoft trial? Is it critical to the future of business or merely a software sideshow? Tell us what you think at the Oracle and PeopleSoft discussion boards. Don't have access to our Foolish community? No sweat. It's easy to give us a try.

Fool contributor Tim Beyers thinks it would be hugely entertaining to get Marc Benioff on the stand in the Oracle-PeopleSoft trial. Tim has no ownership interest in any company mentioned, and you can view his Fool profile here.


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