Oracle Plots Course

The plan, which bears CEO Larry Ellison's typically audacious stamp, calls for the company to continue development on Oracle, PeopleSoft and J.D. Edwards products while simultaneously working on a superset suite that combines the best of all three, dubbed Project Fusion. It also will operate separate support organizations for the different products, ensuring the same face to customers, as it slowly melds the different channel organizations under a single umbrella.

Competitors in the apps space are already launching counteroffensives. SAP last week unveiled an aggressive migration program that offers PeopleSoft customers 75 percent trade-in credit toward the German company's flagship ERP suite.

Two weeks earlier, Microsoft offered its own migration program to woo PeopleSoft's J.D. Edwards customers to Microsoft Business Solutions.

Solution providers greeted the stepped-up activity with guarded enthusiasm. "Oracle has been working very hard to make PeopleSoft customers comfortable, and the fact that Oracle will continue to support [customers'] investments in PeopleSoft and J.D. Edwards products is reassuring," said Don Landrum, vice president of The CD Group, a Norcross, Ga.-based reseller and implementation partner of both PeopleSoft and SAP.

"It's obvious that both SAP and Microsoft are trying to extend an olive branch to those potential customers who might not want to stay with Oracle," he said. Expected to be completed in 2008, Project Fusion will be standards-based and feature a dynamic HTML user interface, Ellison said. Oracle also will develop standards-based tools to build the new application.

Project Fusion will contain the best of all three application lines, Ellison said. This next-generation product also will further Oracle's vision of information access, with Oracle's database and application server engineering teams contributing to the development effort, he said. The result will be an application architecture that intimately ties into Oracle's database and infrastructure software.

"I will try to persuade you that we can do both," Ellison told customers and analysts. "We're a very large company and have the financial wherewithal to do this. We can continue to develop all three lines while simultaneously developing a successor merged suite of products."

But can Oracle really deliver on this grand vision while continuing development on existing products? Despite Ellison's statement of financial wherewithal, the fact remains that Oracle spent more for PeopleSoft than the $9.4 billion it has on hand in cash and readily converted assets. In a filing with the SEC, Oracle revealed it has arranged $1.5 billion in credit to help finance the $10.3 billion deal. Competitors say they now see an over-extended company facing a long period of adjustment.

"Oracle has now depleted its cash," said one PeopleSoft partner who requested anonymity. "Will SAP and Microsoft reduce their prices? What if IBM lowers pricing on DB2 and Microsoft lowers SQL Server pricing? If they decide the big boy is showing some signs of stress, they just might go in for the kill."

That appears to be SAP's strategy. Last week, the enterprise applications leader unveiled its "safe passage" migration program to customers that use both SAP and PeopleSoft software. SAP will provide technical support, including bug fixes, for PeopleSoft products. PeopleSoft customers also will get 75 percent trade-in credit off their original licensing price, to migrate to the mySAP ERP suite.