The evidence contradicted the Justice Department's view that PeopleSoft competes only against SAP and Oracle.
Oracle is attempting a hostile takeover of PeopleSoft, a chief rival in the market for software packages that businesses use to manage payroll, human resources and related functions. The Justice Department is trying to block that move, contending that it would leave Oracle and German rival SAP as the only significant companies in the market--dominating without enough competition. Oracle is arguing that other viable contenders abound.
After Microsoft announced in late 2000 it was buying Great Plains Software, PeopleSoft executive Renee Lorton sent out an e-mail: "Breaking News. Microsoft buys Great Plains. Yikes!" In the missive, addressed to Ram Gupta, she wrote that PeopleSoft "should be shaking in our boots," characterising Microsoft's move as "a gun at our and Oracle's back."
She also wrote that she didn't buy claims that Microsoft wanted to stay in the midmarket but would move up into the enterprise space, where SAP, PeopleSoft and Oracle sell to large customers. "If (Microsoft Chairman Bill) Gates doesn't want to own the space, he doesn't bother," her e-mail said.
Under cross-examination from Oracle, Phillip Wilmington, PeopleSoft's executive vice president of North American sales, dismissed the e-mail, saying Lorton was alarmist because she was seeking a higher budget for her department. She is vice president and general manager of PeopleSoft's Financial Management department.
On Wednesday, Wilmington testified that his company and Oracle often discount their software by 50 percent or more when they're competing with each other for big corporate accounts. He cited Target, Nextel Communications, Cardinal Health and CareFirst among examples of accounts with which this happened.
By contrast, he said, PeopleSoft did not cut prices when its competitor for an account was Lawson Software, but made the sale anyway because the products from the smaller Lawson are viewed as inferior or less complete than those of the market's three main competitors.
In an internal PeopleSoft memo also released Thursday, another executive identified PeopleSoft's chief competition as Siebel, SAP, Oracle and Microsoft. "Of everyone I'm going to mention, I think the biggest long-term threat is Microsoft," said Doug Merritt, who has left PeopleSoft, in the document. Merritt was general manager of the company's human capital management systems division.
Oracle attorneys also displayed documents showing that PeopleSoft competed extensively with Lawson, offering discounts to companies such as defense contractor Northrop Grumman, the state of Arizona, the Federal Reserve Bank, Albertson's, San Diego Public School District, Duke Energy, McGraw-Hill and Williams-Sonoma.
PeopleSoft and the Justice Department have downplayed Lawson as a major competitor in the business applications space.
The trial opened June 7 with the Justice Department presenting its case. Testimony has revolved around representatives of large companies--DaimlerChrysler, Verizon and others--that use the kind of software Oracle and its competitors sell. The government's witnesses have expressed concern that software implementations would cost millions of dollars more in a market without PeopleSoft, and current PeopleSoft customers have said they fear Oracle will stop supporting their software, making expensive new systems a necessity.
Oracle will present its case after the Justice Department finishes. The nonjury trial is expected to last about four weeks.
