Wharton Tech Blog

Knowledge@Wharton has an interesting article on the Oracle / Peoplesoft merger. Fifteen months after launching its hostile takeover bid for PeopleSoft, Oracle has moved closer to victory by winning a Department of Justice lawsuit that sought to block the merger. While the fight is far from over, will the victory - if it arrives - be a Pyrrhic one for Oracle? Experts at Wharton and elsewhere weigh in on the prospects.

My own view is that this is part of an ongoing commoditization in the layers of software applications, from the low-level OS (linux, freebsd) throughout the middle-ware, high-end business and consumer apps (openoffice, J2EE, postgresql, etc). Value has been created by key software vendor in each of these layers (Windows, .Net, Oracle, SAP, Office, Adobe, etc) that has been able to hold the commoditization wave and the competitor solutions haven’t reached the “good enough” stage. Now, when even ERP software is being sold at 70% discount, this begs the question of what’s the competitive value of an Oracle business apps package over one from Peoplesoft. Clearly SAP has stood out from these battles, but the erosion in the commercial value of software layers continues. As open source moves from one layer to another, the bottlenecks in these software layers are places where software companies can expect to create most value and profits at the same time.

I have more ideas on this topic and will continue to add.

This entry was posted on Thursday, September 23rd, 2004 at 3:57 pm and is filed under Software. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.