Page Two

By Renee Boucher Ferguson  |  Posted 2004-06-07 Print this article Print

Both the Justice Department and Oracle will call Microsoft officials to the stand to substantiate their point of view. Oracle will point to longtime rival Microsoft as a welcome competitor in the enterprise market, while the Justice Department will suggest that Microsoft has no intentions of entering the "upmarket" for at least two years—the time frame set forth by antitrust guidelines. Click here to read more about the trial strategies for both sides.
The twist with Microsoft is that while officials have steadfastly denied any intention to enter the ERP market in the near future, its considered a well-known secret that the company is indeed headed in that direction.
Even the hint of a merger discussion between Microsoft and SAP—particularly initiated by Microsoft—is a good indication that the company has its sights set on larger applications markets. "SAP, like all publicly held corporations, routinely evaluates potential opportunities to strengthen its leading position in the enterprise software market, and the disclosure made today should be interpreted that way," said Henning Kagermann in a statement. Robert Christopher, an antitrust attorney and head of litigation for Northern California with Coudert Brothers LLP, said most companies walk a fine line between their right to have private, preliminary merger discussions and their responsibility to inform shareholders of whats going on with any negotiations. "These are tough situations for companies," said Christopher, in Palo Alto, Calif. "They will often explore ideas privately. If theyre public, at a certain point in time they have an obligation to disclose whats going on. But if its preliminary, they do not have the obligation to disclose, so its a tough call." Christopher did say that todays revelations about pre-merger talks between Microsoft and SAP may not bode well for Oracle. "My gut reaction is this would work in favor of the antitrust division," said Christopher. "Part of Oracles argument is there are companies such as Microsoft who might prevent in the future continued market consolidation. If Microsoft should acquire SAP that would further threaten an increased consolidation of market power because it would eliminate one of the competitors in that space." Rather than pointing to SAP being on the market, or Microsoft looking to acquire more ERP providers, Gartner Group analyst Jeff Comport said the discussions between Microsoft and SAP show that "both vendors clearly recognize the importance of a broad stack—infrastructure, middleware and up through applications," said Comport, in Stamford, Conn. "Combining the companies would be one way to compete against Oracle and IBM." Comport pointed out that Microsoft so far has followed an incremental strategy when it comes to acquiring applications businesses in order to build its enterprise capacity step-by-step, and at the same time rely a great deal on internal development. Comport all but rules out a similar acquisition by Microsoft. "Anything that would be on the large scale of SAP—there are few [options]," said Comport. "But clearly, SAP didnt go anywhere. With the amount of IBM in [SAPs] install base, and the amount of Oracle in the install base, in a market where Microsoft wants to forward its own stack—[it] is not a good idea." Editors Note: This story was updated to include comments from Robert Christopher and Jeff Comport. Check out eWEEK.coms Enterprise Applications Center at for the latest news, reviews and analysis about productivity and busi-ness solutions.

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