Phillips: PeopleSoft cannot survive without Oracle

Phillips: PeopleSoft cannot survive without Oracle

Listen to Oracle president Charles Phillips talk about the PeopleSoft acquisition and it sounds like the company is engaged in a community service rather than a hostile takeover bid.

At Oracle's OpenWorld 2004 in Melbourne last week Phillips made it clear Oracle doesn't 'need' to takeover PeopleSoft, it 'wants' to acquire the enterprise applications market competitor.

If Oracle doesn't succeed, he said, then PeopleSoft will be acquired by the likes of Computer Associates (CA).

"Customers will be better off over the next decade; PeopleSoft doesn't have the critical mass to survive in this business so it's a matter of 'if' we buy them, or Computer Associates buys them 10 years from now," Phillips said.

"They are much better off with us, believe me."

In fact, he even expressed concern about JD Edwards' customers and their suffering due, he said, to the lack of integration by PeopleSoft since the companies merged last year.

Asked if Oracle would kill off JD Edwards products if it acquired PeopleSoft, Phillips said, "PeopleSoft is doing a good job of killing them [JD Edwards] stone dead without our help."

He said the integration work undertaken to date by PeopleSoft was very "point to point, loosely coupled integration" of small value to customers. "But I think most of the customer base, especially the JD Edwards side, is wondering what's in store for me in the future because [PeopleSoft] hasn't been communicating that well to its user base," Phillips said.

He described the PeopleSoft acquisition as "opportunistic", a move that makes sense for Oracle shareholders and will benefit the user base. "It's an opportunity to get more critical mass in the apps business. Those customers are already defecting from PeopleSoft each quarter; some convert to us, some convert to SAP and other players," he said.

"So if these guys are going to move some place we'd much rather them move to us. Let's take advantage of this and get them to migrate to Oracle."

Asked what PeopleSoft could do for Oracle, Phillips said the key with most software business is to have enough customers to spread research and development (R&D) across more products.

"You can spend more if more customers are paying maintenance and buying more products. So having 30,000 customers is better than having 10,000," he said.

"Those customers would mean more to us than any other applications company because we have an entire tech stack behind the application." Greater critical mass, Phillips said, allows the company to better compete with SAP and this acquisition also means more market share.

Asked about likely targets in the database space, Phillips said Oracle is in good shape in this market segment but wanted to beef up capabilities in the middleware arena.

"Never say never, but more interesting is the middleware space, particularly application servers. Larry's [Ellison] has mentioned BEA on and off in the past, we'll see what happens," he said.

BEA Systems was unwilling to comment.

Sandra Rossi travelled to Melbourne as a guest of Oracle

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