IDC Study Examines Impact of PeopleSoft Acquisition by Oracle on Vertical Industry Market Penetration

FRAMINGHAM, MA – January 11, 2005 – The possibilities from a newly formulated Oracle Corp. raise the question of what Oracle's new profile will look like from a vertical industry perspective. According to a new study from IDC, which defines PeopleSoft and Oracle Corp. in terms of North American vertical industry penetration, differences in vertical industry segmentation may already exist between Oracle and PeopleSoft that make this acquisition attractive for Oracle. These differences could also ultimately impact the solution set offering from Oracle, from an applications perspective, as well as impact how Oracle develops solutions for specific industries and which industries it may attempt to excel in the future.

"While the Byzantine acquisition process finally plays itself out, a current vertical dissection may answer some immediate questions regarding how these two companies compare in specific industry strengths," said Scott Tiazkun, IDC program manager, U.S. IT Opportunity, Healthcare. "In fact, analyzing their vertical profiles may clarify certain outcomes. At the very least, the glacial pace of this acquisition has allowed for analysis of the two companies, creating a precise picture of just which vertical industries these companies have been able to penetrate."

Among the key findings presented in this study are the following:

— With a few major exceptions, Oracle and PeopleSoft today have similar strengths in many of the same vertical industry breakdowns that IDC tracks. This was not always the case, but the acquisition of J.D. Edwards by PeopleSoft recreated PeopleSoft as a company with greater manufacturing depth and decreased the preponderance of solution sales toward education and healthcare.

— Recent announcements by Oracle that there are "other acquisitions" the company could make (in addition to PeopleSoft) may prove strategically wiser than previously thought. Highly specialized vendors, in healthcare and financial services, for example, have showed great growth in the past few years when more horizontal-focused vendors have remained low growth or stagnant. Although the PeopleSoft acquisition will remove a competitor, it may not boost Oracle's presence in highly coveted, high growth, vertical industries when compared with the benefits of a more strategic acquisition of an industry-specific vendor.

— Although it is still too early to compare, Oracle — post-PeopleSoft — may be in a position to compete with SAP on a more equal footing in some manufacturing subsegments, those where SAP is already strongly entrenched.

This IDC study, Vendors by Vertical: Will PeopleSoft + Oracle = SAP? (IDC #32578) defines PeopleSoft and Oracle Corp. in terms of North American vertical industry penetration and discusses vertical strengths and weaknesses of both companies. Also discussed is the vertical footprint of rival SAP.

To purchase this document, call IDC's sales hotline at 508-988-7988 or email sales@idc.com.

As market consolidation continues to affect IT markets, focusing on the vertical industry profiles of large vendors is crucial to understanding their market presence and how vertical market influences can impact their overall and ongoing business. For more information on IDC's Vertical Market Research Group, please contact Virginia Lehr at 508-935-4188 or email vlehr@idc.com.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

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