Oracle-DOJ: What We Learned Last Week

Opinion: I was right: Paying attention paid off. We now know why J.D. Edwards flunked the big-enterprise contest; that Microsoft likely fibbed; and that Judge Walker is confused.

Lets cut to the chase: What exactly have we learned after the first week of the DOJ-Oracle trial?

Microsoft made overtures to SAP. Yes, Microsoft, which told the DOJ it had no intention of entering the market for large enterprise software anytime soon, confessed that it had cozied up to SAP last year to discuss a possible merger.

The deal didnt come to pass—the size of it, after all, would dwarf an Oracle-PeopleSoft combination and send antitrust regulators through the roof—but it provides what most consider to be clear evidence that Microsoft was being—ahem—"disengenous," shall we say, with the DOJ.

Oracle discounts its software by as much as 70 percent. Keith block, Oracles executive vice president, admitted in videotaped testimony that the company cuts software costs by as much as 70 percent when the competition is fierce enough to warrant such aggressive pricing tactics.

In addition, as Enterprise Applications Center Editor John Pallatto reported from the trial floor, Oracles former senior vice president of North American application sales, Paul Ciandrini, said in videotaped testimony that in one case where PeopleSoft and Oracle were going head-to-head—for a deal with Hallmark Corp. that Oracle eventually won—price quotes that started around $2 million wound up getting slashed to about $1.2 million.

Thats a huge discount off the list price. Its good to know that Oracle will go to such extremes.

But will that insight into Oracles sales tactics be usable if Oracle manages to acquire PeopleSoft? Will there be competitive instances where Oracle is pushed to the wall to the same degree as PeopleSoft evidently achieved? Therein lies the nub of the trial, but in the meantime, it sure cant hurt to know how far the company can go.

Next page: IBM, Microsoft and Siebel are eyeing the enterprise applications market.