Analyst Scoreboard: Oracle vs. PeopleSoft

Comparison of industry analyst responses to the latest development in the Oracle vs. PeopleSoft saga shows consensus skewing toward takeover success, but planning for uncertainty is their best advice.

On September 9, 2004 the legal drama between Oracle and PeopleSoft took a turn in favor of Oracle when the U.S. District Judge ruled that a merger of the two software companies would not violate antitrust law. In turn, report after report trickled in from each of the major analyst firms in the industry, offering perspectives on the event and providing guidance to wearisome PeopleSoft customers. ZDNet Research reviewed reports from Gartner, META Group, AMR Research, Forrester, Yankee Group, and Ovum for comparison. Here is what we found.

Analysts agree that Oracle is not out of the woods yet, since a number of additional obstacles remain, such as the EU antitrust decision, pending lawsuits, and PeopleSoft's "poison pill." However, there is noticeable variation on the threat levels of some of these obstacles. Ovum and AMR Research say that the European Commission is unlikely to block the deal, while Yankee says that it poses a major challenge for Oracle. There is also discussion of a "white knight" possibly stepping in to acquire PeopleSoft or at least block the transaction. Forrester highlights this prospect the most, while others like META and AMR suggest that it's a fight that other software firms best stay out of.

Few analysts actually give their opinion on whether or not the merger makes sense. Yankee Group and Ovum are the exceptions. Yankee is in favor of Oracle and PeopleSoft being a single company, arguing that most of the competition in software has now coalesced at the "edge" of the enterprise. This includes portal solutions, integration technologies, and Web-based applications, which would make other major vendors like IBM, Microsoft, and SAP would-be competitors to Oracle. Similarly, Ovum says that the merger would underline the view, which it promotes, that the industry is maturing and consolidation will accelerate in the software market.

META Group, Gartner, and Forrester took more subdued positions in their takes, focusing more on making recommendations for PeopleSoft customers and discussing what the outcome of the case means to the industry. The table summarizes what all six analyst firms suggest PeopleSoft customers do at this stage of the Oracle/PeopleSoft battle.

Analyst Firm	Recommendation for PeopleSoft customers
AMR Research	Assume that in the event of an acquisition, products would be well supported with at least minimal level of enhancements. (View report)
Forrester	Upgrade to a current version that is stable and reliable, reassess maintenance needs, and proceed with caution on new licenses. (View report)*
Gartner	Continue to weigh the possibility of the acquisition completing, with the result that PeopleSoft's product strategy will shift. (View report)
META Group	Pay attention to PeopleSoft product investment strategy to determine your level of risk. (View report)
Ovum	None (View report)
Yankee Group	PeopleSoft customer should not panic, but companies should avoid signing new deals. (View report)