Oracle-PeopleSoft tangle puts price pressure on suppliers, says SAP

The dispute between Oracle and PeopleSoft is placing pricing pressure on suppliers throughout the enterprise applications market,...

The dispute between Oracle and PeopleSoft is placing pricing pressure on suppliers throughout the enterprise applications market, SAP executives said yesterday.

"We are faced with some extraordinary things that people are willing to do on the other side, that requires from us a certain amount of flexibility," said Leo Apotheker, SAP's president of global field operations.

SAP won several significant deals this quarter with companies that included Maytag and Newell Rubbermaid.

"We beat Oracle, where they substantially discounted beyond the market norms," said SAP America chief executive officer Bill McDermott.

SAP CEO Henning Kagermann expressed his misgivings about Oracle's unsolicited bid for PeopleSoft.

"We have seen this consolidation in the market, and we are a little concerned that the way it was handled was not very professional. Normally, our industry relies on trust - long-term trust - from our clients," he said. "We feel there is short-term damage to our industry."

Last month SAP launched an advertising campaign aimed at wooing disenchanted PeopleSoft and Oracle customers to prime future opportunities for the company.

"The campaign cannot deliver any short-term results because the cycles are still going to be the same. A customer who has to make an important decision like this will take his time," Apotheker said.

"What it did generate is the opportunity to talk to a certain number of customers using competitive products, and these talks are continuing."

Apotheker admitted he was unable to predict how long the industry's price warfare will continue, saying that it depended on how long the Oracle-PeopleSoft battle continues.

 "If it's going to drag on for another year or so, and that's possible, then I do believe the pricing pressure will cease. There's an element of suicide here," he said.

Stacy Cowley writes for IDG News Service

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