Sunday, September 18, 2005

Oracle to buy Siebel for $5.85 Billion

Here we go again.

Oracle is buying rival Siebel Systems in a deal worth $5.85 billion in cash and stock. Siebel is a CRM (Customer Relationship Management) software provider. This is a continuation of the acquisition spree by Larry Ellison. Last December, Oracle purchased Peoplesoft for $10 billion in a deal that still leaves people shaking their heads.

"In a single step, Oracle becomes the number one CRM applications company in the world," said Oracle chief executive Larry Ellison. "Siebel's 4,000 applications customers and 3.4 million CRM users strengthen our number one position in applications in North America and move us closer to the number one position in applications globally."

The deal is approved by the Oracle board and is expected to be completed in 2006. This will be an interesting acquisition with you have two CEO’s with big egos. I used to work for a company competing in the CRM space and at one point Tom Siebel was looking to buy our company. Fortunately or unfortunately, it did not pan out.

Let’s take a look at the two leaders in the Oracle/Siebel deal:

Larry Ellison
Age: 59
Best Asset: big market share of hard-to-replace databases
Worst Liability: himself
Quote: "I don't like Tom."

Tom Siebel
Age: 52
Best Asset: pioneer in sales force automation software; famously hard-charging salespeople keep Siebel front and center
Worst Liability: perceived as slow in embracing the Internet and new technologies; loads of new and potential competitors
Quote: "Ellison is agitated that we exist."

Over the last few years, Ellison has been determined to dominate the CRM space. He has spent a ton on internal development to come up with a good CRM product, but has not been able to. He is now on a acquisition kick to try to compete with SAP. Frankly, I am putting my dollars on SAP. I think Ellison is going to drive customers to SAP.

And you can quote me on that.


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