Microsoft Offers PeopleSoft Users A 25% Discount

Microsoft Corporation, the world’s largest software company, is offering a 25% discount to customers that may be leery of sticking with products made by PeopleSoft Incorporated after its $10.3 billion acquisition by Oracle Corporation.The offer covers licensing of business applications such as accounting and payroll, and the first year of support programs, Microsoft said in a statement. PeopleSoft became part of Oracle last week after an 18-month takeover battle.Microsoft is courting PeopleSoft customers concerned that Oracle won’t keep providing upgrades and other support for the products. The discount offer follows an e-mail message in December, suggesting that PeopleSoft clients switch to Microsoft’s database software. If successful, the tactic would impede efforts by Oracle’s chief executive, Larry Ellison, to keep PeopleSoft’s 12,750 customers.“Everyone is going in for the kill here,” said Charles Di Bona, analyst at Sanford C. Bernstein & Company in New York, ranked as the no. 2 software analyst by Institutional Investor magazine. “The competitors are not going to sit around and play nice. Oracle overpaid for PeopleSoft and one of the reasons I think that is that there’s going to be some attrition among customers.”Oracle is the no. 2 maker of business applications software, behind SAP AG. Microsoft sales of business applications programs rose 18% to $667 million in the year ended June 30, less than Microsoft had hoped. On June 3, Microsoft said its chief executive, Steve Ballmer, would take direct oversight of the unit, called Business Solutions.An Oracle spokeswoman, Deborah Lilienthal, declined to comment. The company has said it will support PeopleSoft products until 2013. Oracle announced last week that it’s working on software that will combine features of both company’s programs, to be delivered within three years.“Businesses that use PeopleSoft technology are facing some difficult choices today, and we’re committed to providing them with the best options for moving forward,” said the senior vice president for the business applications group at Microsoft, Doug Burgum, in yesterday’s statement.Microsoft’s business applications group focuses on customers with less than 1,000 workers. PeopleSoft’s 2003 purchase of J.D. Edwards & Company gave it some of the smaller customers that Microsoft typically targets.Microsoft may not get a lot of J.D. Edwards-PeopleSoft customers to replace existing programs now, but those customers may switch over when they get ready to buy new software, said an analyst at Boston-based AMR Research Incoporated, Bruce Richardson.“You’d have to be really furious with Oracle to be willing to gut what you’ve already invested in, but the next system that J.D. Edwards customers buy into, it’s more likely to be Microsoft-based than either Oracle or SAP just because Microsoft is cheaper,” Mr. Richardson said.Oracle shares fell 14 cents to $13.19 yesterday in Nasdaq Stock Market composite trading. Microsoft rose 13 cents to $26.80.The discount offer may renew Oracle complaints that Microsoft is trying to steal some of its larger customers. Oracle made the assertion in an antitrust case brought by the American Justice Department. The government argued that the PeopleSoft acquisition would reduce competition because only Oracle, PeopleSoft, and SAP supply software for human resources and financial management to large corporations.Oracle’s Mr. Ellison has maintained that the merger was intended to fend off Microsoft’s attempts to take the no. 2 spot in the market. Oracle argued throughout the antitrust trial that Microsoft already competed with Oracle for big clients.A judge agreed with Oracle that it had many competitors, including Microsoft, and granted permission to proceed with the PeopleSoft takeover.Microsoft officials concede they have sought some clients with up to 10,000 workers and some divisions of larger corporations, in direct competition with Oracle. Mr. Burgum said in June during the antitrust trial that such customers represented less than 10% of his unit’s sales.Microsoft is in the middle of a five-year program investing $10 billion to increase sales of business applications. In April, Microsoft’s chief financial officer, John Connors, said the group had the “weakest results” of Microsoft’s seven business units for the March quarter.

Microsoft Offers PeopleSoft Users A 25% Discount

Microsoft Offers PeopleSoft Users A 25% Discount

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