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Truth, Justice and Another Piece of Bizarre Reasoning

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11th Mar 2004
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America - land of the free. The spiritual home of capitalism in all its gaudy and unapologetic splendour... unless you work for the Justice Department that is.

I was so determined not to return to the Oracle/PeopleSoft issue this week, but events have conspired against me. In this particular instance, the event in question is this week's news that the Justice Department intends to argue that the fact that Oracle bids lower prices than its rivals in competitive tenders, can be be construed as the basis of an anti-competitive action law suit

For heavens sake, what sort of world does the Justice Department and assistant attorney general R Hewitt-Pate think we live in? It's clearly a happier, more level place than the hurly burly of the 21st century software market.

Picture the scene. It's a competitive bid coming up for business. Salesman One: "We need to win this business. How about we adopt a radical new strategy and bid a lower price than the other guys?" Salesman Two: "Oh, we can't do that - that wouldn't be fair on the other guys, would it. We might win the business if we offer the customer a lower price than they do" Salesman One: "Oh gosh, you're absolutely right. How could I be so selfish as to want to win the business. I'm so ashamed".

Oracle's pricing has always been a matter of contention. In the early, mad old, bad old days of the company, Oracle salespeople would slash prices just to keep the competition out of a deal. On occasions, software was basically given away to win marketshare. That exploded on them in 1990 when the company's accounting caved in and the firm tottered on the edge of collapse.

Since then, there's been a more conservative approach in play. That's not to say that there isn't deal making and competitive undercutting going on. In recent years there's been much talk of a global price list, the one true price list to rule them all, from which no-one may deviate. Yeah, and over here I've got a nice opera house on Sydney Harbour Bay to sell you!

But that's business. The ludicrous notion that Oracle is not going to cut its prices in order to win business is absurd. It's scarcely an anti-trust arguement as I understand it. But then the Justice Department's entire approach to this case is increasingly beyond my understanding.

There seems to be a willful determination to ignore fundamental realities. This week alone we also saw Justice accepting that Microsoft is not about to move into the Oracle/PeopleSoft market within two years and as such are not a competitive factor. Maybe not within two years, but does anyone really believe Microsoft does not have entirely legitimate enterprise ambitions in the applications market?

Apart from the Justice Department, of course. Now about that opera house. Mr Hewitt-Pate... would you like me to gift wrap that for you?

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By grahamtownsend
12th Mar 2004 09:28

Presumably public organisations in the US will now have to revise their competitive tendering procedures so as to prevent dealing with the lowest bidder on the basis they shouldn't be dealing with firms who behave uncompetitively. That'll help Mr Bush deliver his tax cuts!

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By grahamtownsend
12th Mar 2004 09:28

Presumably public organisations in the US will now have to revise their competitive tendering procedures so as to prevent dealing with the lowest bidder on the basis they shouldn't be dealing with firms who behave uncompetitively. That'll help Mr Bush deliver his tax cuts!

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