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IBM rejects riding to PeopleSoft rescue

By Iain Ferguson, ZDNet on August 6, 2003

Summary

IBM says it is happy to stay on the sidelines, as Oracle's hostile bid for PeopleSoft drags on.

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IBM says it is happy to stay on the sidelines, as Oracle's hostile bid for PeopleSoft drags on.

A senior IBM executive has ruled out the technology heavyweight riding to the rescue of embattled applications software company PeopleSoft as it fights a US$7.3bn (£4.54bn) hostile acquisition bid by Oracle.

Steve Mills, the senior vice-president and group executive of IBM's Software Group, told journalists at the company's research headquarters in Westchester, New York: "We're not in the applications business and we don't plan to be in the applications business.

"The amount of revenue IBM gets by partnering and not competing with the applications companies far exceeds the revenue we would get if we competed with them."

Mills' comments come as tension between PeopleSoft -- fresh from its acquisition of another rival, J.D. Edwards -- and Oracle over the hostile acquisition bid ratchets up to new levels.

PeopleSoft chief executive, Craig Conway, reportedly told a US newspaper "this game is dead;" a position hotly disputed by his Oracle rival, Larry Ellison.

Mills did concede that, having made the strategic decision not to tackle the applications market, IBM would have to live with the ramifications of any transaction that took place.

However, that said, "with every action goes a reaction in the marketplace that you can take advantage of," with consolidation likely to provide incentive to other software companies to partner with Big Blue.

That said, he added, "I personally believe it is doubtful that Oracle will complete the transaction".

Mills also took the opportunity to blast Oracle -- a key competitor of IBM's in the database arena -- over its database strategies, saying:

"Their prices are high, their support is poor."

"They don't make customers' happy."

He added that Oracle had a skewed view of its database products, saying that while Ellison's company viewed them as great, they were "nothing special".

Mills also moved to downplay IBM's role in shifting software development positions from the US to lower-cost countries such as India, arguing that key drivers for laboratory location and growth included the ability to build capabilities and build products in collaboration with domestic companies.

"This is not about moving skilled jobs elsewhere," he said.

ZDNet Australia's Iain Ferguson reports from Sydney.

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