Tech Industry

Technology 101: Oracle judge gets tutorial

A crash course in enterprise application software helps the judge get up to speed before weighing antitrust issues in Oracle's proposed hostile takeover of rival PeopleSoft. The trial starts June 7.

U.S. District Court Judge Vaughn Walker received a technology tutorial Friday, in preparation to hear the U.S. Department of Justice antitrust case against Oracle next month.

Walker will weigh whether Oracle is violating antitrust laws via its $7.7 billion hostile bid for PeopleSoft. And in laying the groundwork before the trial's June 7 start, Oracle and the Justice Department offered up a technology tutorial for the judge to outline the products involved and role they play in the industry.

Walker, who previously indicated a need to get up to speed on the technology involved, showed interest in several key areas during the combined three-hour presentation by the Justice Department and Oracle. Antitrust attorneys who have appeared before Judge Walker say the types of questions he asks can indicate the areas on which he will focus in a case.

The judge expressed interest in discerning the difference between middleware and enterprise applications, as well gaining a deeper understanding of back-office and front-office software. He also seemed interested in the life cycle of products, such as the upgrade cycle and maintenance fees, and asked about pricing.

The Justice Department kicked off the tutorial with a two-hour presentation that included videos on a sales pitch to Keane Consulting by both Oracle and PeopleSoft, followed by a live lesson from PeopleSoft Chief Technology Officer Rick Bergquist, and ending with videotaped depositions from Jeff Henley, Oracle chief financial officer, and Oracle CEO Larry Ellison.

During Bergquist's presentation, he displayed a chart of the players involved--starting with chipmakers, hardware vendors, operating system software developers, database vendors, middleware players and then enterprise applications software vendors. The judge, in one of the few questions he asked during the tutorial, inquired whether the applications software in question was middleware.

And when a chart displaying the enterprise software application life cycle was presented, the judge appeared to closely study the chart as Bergquist discussed the products and need for upgrades and maintenance. Judge Walker asked whether pricing would be discussed and is it done at each point of the way during a products life cycle.

Bergquist noted that most customers typically want to know the total life cycle costs of owning the software and that licensing fees only represent about 20 percent of those costs.

The Justice Department, in presenting the Keane video featuring the sales pitch of both Oracle and PeopleSoft, halted the footage prematurely due to poor audio and video quality. But the videotape deposition of Ellison was of better quality and provided a bit of levity to the tutorial.

Ellison cited his usual mantra that software suites will win out with customers over enterprise application vendors, who specialize in one particular area, otherwise called "best of breed."

"If you buy a best of breed, you get a lot of pieces that you will have to connect through a system integrator. We do suites and you won't need to do integration, so your costs are lower and you get better information this way," Ellison said. "Best of breed only works at dog shows."

Dan Wall, Oracle's outside attorney in the antitrust case, noted that while Oracle markets the advantages of an integrated suite, not many customers buy the full suite that Ellison has discussed, but rather cobble together the best of breed technology.

Oracle did an informal presentation in which Wall asked Ron Wohl, Oracle executive vice president of applications, questions concerning the company's business and products.

Walker questioned Wohl on where software vendors who specialize in such areas such as car parts, or retail, would fit into the definition of a back-office software vendor and front-office vendor.

And the judge also questioned Wohl on whether Oracle can sell its technology in pieces, or only as a suite.

The one-day lesson probably didn't make Walker a software guru, however.

"No one learns this in a day," Wall said. "Today was the first step...If you stay at the cartoon-level of describing it, you never understand it...It's important to understand the underlying technology."