PeopleSoft Granted Hefty Discounts to Outsell OracleBy John Pallatto | Posted 2004-06-16 Email Print
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A top PeopleSoft sales executives testifies that he approved discounts of up to 55 percent if that was what it took to take a sales win away from Oracle Corp.SAN FRANCISCOPeopleSoft Inc. was prepared approve discounts of up to 55 percent off list price to win business from Oracle Corp. and other competitors, a PeopleSoft sales executives testified Wednesday in U.S. District Court here.
PeopleSoft didn't hesitate to discount heavily whenever it was competing head-to-head with Oracle for new business or when it stood a chance to replace an installed Oracle application, said Phil Wilmington, executive vice president for the Americas. In this role, Wilmington manages sales operations in the U.S., Canada and Latin America.
The Department of Justice called Wilmington to the stand to highlight the fierce competition that exists between PeopleSoft and Oracle, which along with SAP AG comprise the top three vendors that hold the vast majority of the market share for high end high-end enterprise resource planning software.
Wilmington said he personally reviews and approves all proposed discounts over 50 percent. Such discounting allowed PeopleSoft to outbid Oracle for major sales to Target Corp., Cardinal Health System Inc., and CareFirst Inc. to name a few, he testified.
In the CareFirst deal, PeopleSoft approved a 55 percent discount and might have considered a 65 percent discount if that is what it took to win the business, according to documents accepted into evidence in court Wednesday.
In this case, PeopleSoft was prepared to offer a particularly steep discount "to incent the customer to close the sale within a particular quarter" to improve the revenue report for that period, he said.
Wilmington also adhered to the DOJ's theory that there none of the mid-market enterprise software providers such as Microsoft Business Solutions or Lawson Software are able to offer the same range of application functionality and scalability as the top three players.
Under direct questioning by DOJ lead litigator Claude Scott, Wilmington said he rarely encounters Lawson in head-to-head competition. Lawson "is not a viable competitor for the up-market customers" that PeopleSoft typically deals with, he said.
Oracle's legal team has argued that the court has to consider such mid-market players, particularly Microsoft and Lawson as competitors who will keep the pressure on SAP and Oracle to maintain fair prices and to keep improving their products.
During a break in the trial testimony Wednesday, Oracle lead attorney Daniel Wall offered an impromptu critique of the DOJ's presentation so far, saying there was a "lack of coherence to the government's theory" that Oracle's goal is to unilaterally control prices and the market for enterprise resource software by taking over PeopleSoft.
He called it a "bit of a grab bag" of claims and arguments that won't stand up to careful examination.
In particular, Wall disputed testimony from multiple DOJ witnesses that they feared Oracle would stop supporting PeopleSoft applications and rapidly force them to migrate to Oracle applications at great expense if the Oracle takeover is successful.
"The acquisition would make no sense" if Oracle planned to pressure PeopleSoft customers with higher maintenance fees or demands for rapid migration to Oracle applications.
Oracle "would be destroying the very relationships we are trying to build by jacking up the maintenance charges," Wall said.
However, customers have testified they were concerned by statements Oracle executives made that they didn't plan to provide long-term support for PeopleSoft applications because they were more interested in the customer base. Oracle officials have since said they would continue to support the applications for at least 10 years.
The trial with resume Thursday with what Oracle's legal team says could be a two-hour cross examination of Wilmington.