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Oracle Attacks Nextel's Use Of PeopleSoft ERP

At its antitrust trial, Oracle said Nextel chose PeopleSoft for a major upgrade because its software rival agreed to resell Nextel's phones, not because it provided the most competitive bid.
Oracle accused Nextel Communications, a witness for the Justice Department in the Oracle antitrust case, of choosing PeopleSoft over Oracle for a major ERP software upgrade because PeopleSoft agreed to resell Nextel's phones, not because the software vendor provided the most competitive bid.

The heated exchange Monday launched what promises to be a long second week, as Justice continues to bring in a steady stream of Oracle and PeopleSoft customers. The government is trying to rally a consensus that having fewer players in the financial software market will take away customer options, raise prices, and stall technology innovation.

Oracle was referring to a March 2002 PeopleSoft internal memorandum.

Richard Ciehanowicz, Nextel's VP of business systems, denied Oracle's allegations. "The price we got from our RFP [request for proposal] was due to the fact that [PeopleSoft] thought we were negotiating with three vendors," he testified.

Ciehanowicz's statements during his two hours on the stand supported the Justice Department's core argument that a consolidation of Oracle and PeopleSoft would result in a duopoly in the high-end business-software market. "We continue to believe PeopleSoft will [provide] significant upgrades," he said, "but it won't happen if they're not motivated by competitors that are leap-frogging them with upgrades."

Asked whether he really think Nextel signed PeopleSoft because they agreed to use Nextel phones internally, Oracle attorney Daniel Wall told InformationWeek that "deals are made on a lot more than software [features]. The pristine model that the Department of Justice's case is made on is not what the real world is based on. It's not the China-doll of a case that they invented."

Oracle called its first witness of the day Monday afternoon--Charles Peterson, senior executive VP at Emerson Electric, who painstakingly spelled out the $15 billion global company's business structure during his hours on the stand.

Peters explained that Emerson relies on a number of ERP software vendors and methods, including homegrown software programs and would never be able to use just one company. The testimony supports Oracle's defense that the market isn't headed for monopoly status because no single software vendor can meet all the needs of one company.

Peters said Emerson is supported by 45 ERP systems. "The software vendors in the financial arena have basic functionality. We have demands that are high-function demands--that no single software vendor offers," Peters said. Oracle attorney Gregory Lindstrom asked if Peters has concerns about a possible merger between Oracle and PeopleSoft. Peters said no, because he didn't use PeopleSoft as leverage in his negotiations with Oracle. Under a $7 million software license, Emerson plans to move most of its human resources, supply-chain management, and financial activity to Oracle ERP software over the next few years.

Conversely, an acquisition of PeopleSoft "gives Oracle more scale, which is more important to me," Peters said. As a customer "you want more applications written for you." Peters also said he would really like Oracle to have more implementation resources available to its customers globally.

The day ended with a Microsoft attorney asking Judge Vaughn Walker for a closed session in which to disclose its information on the case. The packed courtroom of observers was then asked to leave.

The trial will reconvene Tuesday afternoon at the San Francisco Federal Building.

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Samuel Greengard, Contributing Reporter
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John Edwards, Technology Journalist & Author
Astrid Gobardhan, Data Privacy Officer, VFS Global
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing