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Oracle Corp. attorneys cross examined PeopleSoft senior sales executive Phil Wilmington for more than four hours Thursday to try get him to back off from his position that high-end enterprise resource planning software market is limited to three main players.
While Wilmington, PeopleSoft executive vice president for the Americas, staunchly held to the position that Oracle and SAP AG are its only “viable” competitors in the enterprise market, Oracle presented multiple internal PeopleSoft documents that show the company was worried about what some of the “mid-market” competitors were doing.
These documents threaten to discredit the Department of Justices main argument that that Oracles hostile buyout of PeopleSoft would sharply reduce competition in the market for ERP software to the point were it could illegally control prices. The DOJ is asking U.S. District Court Judge Vaughn Walker to grant a permanent injunction to block the buyout.
Oracle attorney Greg Lindstrom presented a December, 2000 e-mail message from Renee Lorton, PeopleSofts general manager of financial management products, expressing alarm about the news that Microsoft was buying Great Plains Software Inc., a producer of financial management software.
Lorton suggested the Great Plains buyout could be the beginning of a major Microsoft push into financial management software because Chairman Bill Gates views “core” business applications “as a natural extension of the operating system.”
PeopleSoft should be on its guard, Lorton indicated, because “I dont believe the claims that they are only targeting the mid-market space.”
Wilmington said Lorton was only sounding the alarm because she wanted to encourage her immediate superior, Ram Gupta, executive vice president of products and technology, to invest more money in the financial management software business.
Microsoft is still only a mid-market player and doesnt challenge PeopleSoft in the enterprise ERP market nearly four years since Lorton wrote that message, Wilmington noted.
Furthermore Microsoft is saying that it will be at least two more years before it completes its Project Green effort to release a single code base for its four business applications suites, included Great Plains, Navision, Axapta and Solomon, Wilmington observed.
Oracle presented other internal PeopleSoft documents that contained an assessment that Microsoft had set a goal of generating $10 billion in revenue from ERP software sales by 2010. To reach this goal, Microsoft was planning to go beyond the small- and medium-sized business market to target companies with revenue up to at least $800 million.
Wilmington said he wasnt personally familiar with Microsofts business plans and he adhered to his position that PeopleSoft didnt compete with Microsoft for sales outside of the mid-market space.
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Lindstrom also challenged Wilmingtons testimony it didnt compete with such companies as Lawson Software Inc. and Automated Data Processing Inc. for business with large enterprises.
Lindstrom presented a PeopleSoft “Competitive update” dated Feb.21, 2002 that ADP was number three on a list of five companies that competed in the worldwide market for human resources and payroll software in the year 2000. Lawson was fifth on the list after Oracle, while PeopleSoft was second to SAP.
He also presented lists of companies culled from PeopleSoft documents that Lindstrom said were examples of software sales deals that PeopleSoft lost to Lawson and ADP. PeopleSoft lost sales competitions with Lawson to such large customers as Albertsons Inc., Kaiser Permanente, Duke Energy Corp., the state of Arizona and the McGraw Hill Companies.
Wilmington said one must examine each deal to see what each customer actually purchased. In some cases it was for a limited set of applications for a portion of the organization. PeopleSoft products may run in other parts of the business or the company may find opportunities to compete for other sales within the same organizations.
During lunch break at the trial at the end of Wilmingtons cross examination Thursday, Oracle lead attorney Daniel Wall said the testimony showed once again that the government hasnt been able to present Judge Walker with a firm definition of what is the enterprise ERP market and what is the mid-market.
Thats because the market is a “continuum” of companies of various sizes, corporate structures and requirements that buy enterprise scale ERP software, Wall said. If the government cant prove that its concept of the enterprise ERP market is real, its going to have a hard time proving Oracle is violating antitrust law with its buyout bid for PeopleSoft.
However, Renata Hesse, a trial attorney in the DOJ technology division, said that Oracle hasnt seriously damaged the core of the governments case. While Oracle may have presented a long list of supposed sales wins by Lawson Software or ADP, it hasnt presented “any evidence at all of what these companies actually bought,” she said.
Oracles lawyers are only “nibbling around at the edge” of the governments case without compromising it, Hesse said. “We think that our case is still pretty much intact,” said Hesse.
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