Oracle romances rivals' customers

Oracle intends to continue its pursuit of PeopleSoft even if it involves taking on JD Edwards as well, and has promised to offer extended support to both sets of customers if it is successful.

The database giant made the promise in the first of its so-called 'town hall' meetings. These are web conferences set up to allay users' fears about its hostile takeover attempts.

With a PeopleSoft acquisition of JD Edwards almost certain, Oracle is being more transparent about its intentions for JD Edwards customers.

"Should we buy the combined company, JD Edwards customers would be treated the same way as PeopleSoft ones," said Chuck Phillips, Oracle's executive vice president.

Oracle promised that PeopleSoft customers using the latest software will receive a decade of technical support and product enhancements. Those using older versions will receive support for longer than is currently planned by PeopleSoft, added Phillips.

Through its advertising campaign, Oracle has made a very public commitment to honouring maintenance contracts, "putting our entire brand at risk if we don't back up that promise," said Phillips.

The company also used its web conference to explain more of the rationale behind its hostile takeover plans. According to Phillips, software firms spend too much money chasing new customers.

With its plans to offer support to existing PeopleSoft and potentially JD Edwards customers, Oracle would benefit from maintenance revenues, and service the customers profitably without having to overspend to attract new customers.

"We are pushing our whole [business] model to recurring revenues: maintenance, outsourcing, that sort of thing," said Phillips.

Despite these promises, there remain large doubts about whether Oracle can succeed with its plans to acquire PeopleSoft.

Should PeopleSoft complete its takeover of JD Edwards, it is highly unlikely that Oracle's current offer of $19.50 a share for Peoplesoft would be sufficient to win the backing of stockholders.

But Oracle remains unperturbed. Although PeopleSoft has made promises in recent deals that refunds, worth many times the original licence fee, would be offered, Phillips said Oracle did not intend to take any actions that could trigger the guarantee.

"We're in this for the long haul," he said.