So it turned out that this time, the rumors WERE true. Last April, I opined here that published reports of Oracle closing in on an acquisition of Siebel Systems Inc. probably were more fiction that fact--partly because the combination didn't make all that much to sense to me, but also because founder and chairman Tom Siebel had remained steadfast in his insistence that his company was not for sale. Silly me-- I bought into the rhetoric.

With surprising ease and speed, Oracle swooped in and scooped up Siebel for a tidy $5.85 billion, establishing itself as the de facto customer-relationship-management software market leader for the foreseeable future. The move continues an Oracle-led consolidation spree that began with the company's contentious takeover of PeopleSoft and continued when it outbid SAP for Retek in March. Forgive me if I sound like a blogger-proved-wrong spewing sour grapes, but I suspect this latest purchase may prove to be a bad move.

Sure, Oracle gets a roster of more than 4,000 customers and 3.4 million licensed CRM users. Yes, it gets two mature pieces of technology--Siebel's 11-year-old core application, as well as the on-demand subscription CRM service it acquired nearly two years ago and which just got its ninth Siebel-architected face-lift this week. It even picks up $2 billion in cash.

But it also comes with baggage. Siebel is not a company that's made its customers the happiest of bunches, and that disconnect proved to be an Achilles' heel the past few years. Numerous competitors--most notably SAP and on-demand upstart Salesforce.com--started stealing away customers, compounding a sputtering economy's impact on CRM deal sizes. As a result, the staff has been in exodus mode, with Siebel managers popping up in new jobs and showing up on interview lists regularly. And if the prospect of adding unhappy customers (OK, MORE unhappy customers--Oracle doesn't have the most customer-friendly rep, either) and a management team in the midst of jumping ship doesn't raise red flags, how about the fact that Oracle emerges from the deal with at least six--count 'em, six!--CRM products?

Just for fun, we'll review that portfolio: Oracle has its own traditional CRM application, and a sales and marketing module embedded in its on-demand E-business Suite; it's got the mature CRM product it inherited from PeopleSoft, plus a lesser-known one that PeopleSoft had picked up in its acquisition of JD Edwards; and now it's adding Siebel's on-premise application and on-demand service. (There are more CRM-like apps hiding in other technology suites Oracle has acquired, but I'll leave that alone for now.) So riddle me this: As Oracle whittles that laundry list of CRM products down to a couple, which group of customers will it decide to tick off? And tick off some it must, because there's no way Oracle can create any kind of clarity in the market with that kind of lineup.

Meanwhile, its main rival in the on-demand arena, Salesforce, has a huge lead on it and is ambitiously positioning itself to be the first totally on-demand enterprise-applications company--a business-apps utility, if you will.

And then there's Microsoft. An admittedly unimpressive player in CRM thus far, Microsoft has been making noise about beefing up its CRM offerings, and in fact, Oracle's move may have been a pre-emptive strike to keep Redmond from establishing any kind of advantage.

Clearly, there are a lot of obstacles standing in the way of an Oracle-Siebel combination maintaining CRM market leadership, and if I were Larry Ellison, I'd expect the ride to be a bumpy one. Then again, judging from his tenacity throughout the PeopleSoft saga, a bumpy ride may be just what Ellison savors. If that's the case, the next couple of years should be a blast for him. I just hope he gets his money's worth.