Thats because investors would rather have their money in a few companies that are doing well, as opposed to having money in "hundreds that arent profitable and from which they cant make any money," he said. "If you compare software to other industries they invest in, softwares much more fragmented," Phillips said. "Its high risk. They want less risk: bigger companies to invest in." But PeopleSoft isnt hundreds of little companies, one audience member pointed out. How will taking it out help investors? "Id say [they want to get rid of] hundreds that are unprofitable and struggling," Phillips said. "PeopleSoft over the past year has been struggling. Thats one reason we believe they went to J.D. Edwards. They had to do something."According to Garry, many Oracle customers, instead of renewing their software licenses when they come due, have instead been rebuying the same exact licensesno more, no less. Oracle has been cutting deals that are up to 80 percent discounted when restructuring the licenses under current terms, Garry said. The license revenues have been showing up as new revenue, but its essentially old wine in new bottles, he said. "The Oracle sales rep doesnt get commissioned on maintenance," Garry said. "So theyre always looking for new license revenue. Its cheaper to rebuy the licenses you already own. Oracle is in a race to diversify their revenue stream as quickly as possible. A huge portion of their revenue comes from database sales. And the database market isnt growing. To remain viable, theyve got to diversify their revenue stream," he saidthus the move on PeopleSoft. Next page: How Oracle will market PeopleSoft apps.
Ironically, one analyst said that Oracles bid for PeopleSoft is indicative of the fact that Oracle itself has to do something. Oracle hasnt been selling new licenses and is casting about for new revenue streamsin this case, revenue from PeopleSoft customer maintenance fees, according to Charlie Garry, senior program director for database research at Meta Group, in Stamford, Conn.