Will Microsoft and SAP see a windfall?

Oracle Gets PeopleSoft, At Last

Yes and no. Besides paying an awfully large amount of money (money that should have been used for product development), Oracle has also promised to continue to support PeopleSoft and JD Edwards. This seems a bit like Microsoft's purchase of GreatPlains/Solomon where no product synergy was(or is)possible. Relative to the other Microsoft strategy of dominating the marketplace and driving the competitor products into the ground, the "acquire and preserve" strategy does not seem nearly as good. The whole "run the old product, develop the new product without alienating existing customers" strategy is the like LaBrea tarpits of software development. Oracle seems to have fallen into this same pit. Assuming Oracle does not go back on this promise, there will have to be four product management teams within Oracle: Oracle Classic, PeopleSoft Legacy, JD Edwards Legacy, and VaporWare 2014 (my prediction as when the "merger" product of the three brands will be a fully mature replacement). It is practically inevitable that this will preserve whatever bad feeling remain for those PeopleSoft people who don't just quit outright.

If Oracle ends up fighting with itself, expect an incredible windfall for SAP (who is in the lead) and Microsoft (who are trying to build marketshare in that space) in the form of defecting customers. PeopleSoft has something like 13,000 customers, so its a big Kitty.

On the other hand, It's not a given that loads of customers will defect. For one thing, once you get in bed with an ERP system, boy oh boy, you are stuck with it (for a few years at least). The other thing is that Oracle has been surprisingly adept at making brutally difficult internal changes. For example:

1) They've changed their pricing model in radical ways at least three times in five years. Microsoft did this too, but I think that Oracle had a more treacherous path and did the whole thing with more skill.

2) They've been surprisingly good at getting out of bad markets without losing face (for example eMarketplaces and NCs).

3) The went from centralized IT to decentralized IT back to centralized IT - and they kept most of their IT staff!

4) Even though Oracle was in full-on "buy PeopleSoft" mode, they kept doing their thing. They didn't break their business model, they kept on making money and they just kept pushing - for 18 months. That's frightening.

For all the money that Oracle paid out, Oracle should want to try to be nice. And honestly, Oracle would be a much better company if it can hold on to the many talented PeopleSoft engineers.