Microsoft and SAP square up for business applications battle
Published: 11 Dec 2003 11:15 GMT
Many in the industry would disagree with that optimistic assessment of the market. One of them is Oracle chief executive Larry Ellison. Ellison says the business software boom days are over, leaving fewer spots at the software feeding trough.
For that reason, Oracle, which makes business applications and database software, wants to acquire ERP rival PeopleSoft. PeopleSoft has rejected Oracle, while pursuing a similar path. It merged with J.D. Edwards, another top supplier of business applications, this year.
All the merging and acquiring is beginning to reshape the playing field and may be prompted, in part, by Microsoft's entry. For instance, Siebel Systems, which specialises in customer service and sales applications, recently acquired UpShot. UpShot, whose pay-by-the-month sales applications often appeal to small companies, may help Siebel square off with Microsoft, which also entered that software niche this year. PeopleSoft's J.D. Edwards buy has put it in prime competition with Microsoft, whose Axapta product line, gained from the acquisition of Navision, competes with J.D. Edwards.
Terry Petrzelka, president of Microsoft reseller Tectura, said Oracle and J.D. Edwards frequently bid for the same contracts he competes for as a dealer of Microsoft Axapta. He says it's only a matter of time before Microsoft uses it impressive research and development budget to improve its business applications and take on SAP. "Microsoft's initial product is not going to beat the SAPs of the world today -- that's a couple years from now," Petrzelka said.
But SAP isn't waiting around for Microsoft to pick a fight. Just around the time Microsoft made its second major business applications acquisition -- Danish software maker Navision -- SAP announced its intention to rekindle an initiative it had abandoned several years ago to sell software to small businesses.
SAP has since introduced two new sets of products, one for companies with less than $1bn in annual revenue, called SAP All-In-One, and one for companies with fewer than 150 employees, called Business One. With these products, SAP wants to grow revenue from sales to companies in the $1bn-and-under segment -- the same category Microsoft targets -- from around 6 percent of software licence revenue to at least 15 percent by 2005.
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