The DOJ has called witness after witness who have taken the stand to dutifully testify that there are only three viable competitors in the market for ERP (enterprise resource planning) software: Oracle, PeopleSoft and SAP.
In cross-examination, Oracles lawyers peppered these witnesses with questions and presented evidence demonstrating that the market is a lot more complicated than that.
For example, PeopleSofts own internal documents and statements from the companys customers show that a number of other major players—not the least of which are Microsoft, Automatic Data Processing and Lawson Software—are fighting vigorously for their slice of the ERP pie.
Its a fair proposition to argue that the Big Three ERP vendors have the market share and sales revenue to dominate the market. Its more of a stretch to demonstrate that the disappearance through a buyout of one of these three companies will make the market noncompetitive. There is no evidence that SAP and Oracle would collude to control prices.
The DOJ has to convince U.S. District Judge Vaughn Walker that smaller competitors dont have the features or the application scalability to seriously challenge the Big Three players. Furthermore, the DOJ has to show that the smaller competitors have neither the resources nor the intent to move into the high-end enterprise market dominated by the Big Three.
Thats exactly what the DOJ is expecting Doug Burgum, Microsoft Business Solutions senior executive, to say when he is called to testify this week about the market positioning for his business unit, which sells accounting, financial management, CRM (customer relationship management) and supply chain management software.
Microsoft seems to have foreshadowed that testimony with a news release over the past week about its plans for MBS, indicating that it will remain focused on SMBs (small to midsize businesses).
Its also clear that Microsoft MBS has a long way to go before it can seriously challenge the Big Three. Microsoft doesnt offer anywhere near the same breadth of applications as the top players. MBS isnt even profitable yet, though Microsoft says it will be by the end of 2004.
The DOJ may have shot itself in the foot by trying to prove that there is a clearly defined high-end enterprise market that only the Big Three can serve. It is easier for the DOJ to demonstrate that only these three have a comparable range of products, features and performance to serve virtually all of the ERP needs of any enterprise large enough and rich enough to afford them.