SAN FRANCISCO -- Microsoft Corp., the world's largest software company, doesn't plan to compete with Oracle Corp. and Sap AG to sell business applications software to companies with thousands of employees, a Microsoft executive said.
Testifying for the government at a trial to determine whether Oracle can pursue its $7.7 billion hostile takeover bid of PeopleSoft Inc., Microsoft senior vice president Douglas Burgum said less than 10 percent of the sales at Microsoft's business solutions unit this year were to companies with more than 1,000 employees and that spend as much as $45 million on technology.
''There's a bunch of dimensions" where Microsoft's products ''would fall short of those solutions" that are provided in software sold by Oracle, PeopleSoft and SAP, Burgum said at the trial in San Francisco.
The US Justice Department, which is suing to halt Oracle's hostile bid for PeopleSoft, used Burgum's testimony to bolster its argument that Microsoft isn't a significant competitor for sophisticated integrated financial and human resource management software sold to large companies. Redwood City, Calif.-based Oracle says Microsoft and other vendors that target middle-sized corporations are viable competitors.
Microsoft and Walldorf, Germany-based SAP said at the start of the trial that they had held acquisition talks that ended a few months ago. According to a document presented at the trial, Microsoft considered the purchase because officials worried SAP might be purchased by International Business Machines Corp. if Oracle bought PeopleSoft.
''We would be positioned to have a seat at the table, too," said Cindy Bates, then a member of Microsoft's business development Group, to chairman Bill Gates and chief executive Steve Ballmer in an e-mail written 10 days after Oracle announced its PeopleSoft bid.
In a 56-page analysis of a possible SAP acquisition, Bates said a ''tightened" relationship between IBM and SAP ''would likely hurt" Microsoft's database business. SAP customers can run business software on Microsoft, IBM or Oracle databases.
During his testimony, Burgum told US District Judge Vaughn Walker, who is presiding over the case, that ''there's a gap" in the functionality of its business applications software that renders it unsuitable for the computing needs of large corporations.
''It would take years and years and years" for Microsoft to match the capabilities of software made by SAP, Oracle, and PeopleSoft.
Burgum said Redmond, Wash.-based Microsoft doesn't have plans to beef up its software to handle the needs of large corporations.