Gartner Says No Other Vendors Likely Candidates for PeopleSoft Merger.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--July 11, 2003

Gartner, Inc.(NYSE: IT and ITB)--

-- Gartner Analysts Say "White Knight" Is Not Needed or Probable at

this Juncture, So Users Should Determine Strategy Based on

Current Market Conditions

While the outcome of Oracle's bid for PeopleSoft remains uncertain, some companies are looking to see if another vendor may step in as a sort of "white knight" and provide an alternative to the Oracle's acquisition.

Gartner, Inc. (NYSE: IT and ITB) analysts said the current positions of other vendors in the infrastructure and application markets makes them unlikely white knight candidates.

The Gartner Research Note "'White Knight' Candidates for PeopleSoft" examines the status of the market leaders and the potential strengths and weaknesses if these companies combined with PeopleSoft. The Research Note does not suggest and is not intended to imply that a white knight is required for PeopleSoft at this juncture, but rather considers the scenarios for vendors such as Microsoft, IBM and Hewlett-Packard if they were to counteroffer for PeopleSoft.

"After examining the opportunities for these other vendors, we believe PeopleSoft and J.D. Edwards prospects and users should consider a 'white knight' scenario as a low probability when considering their options," said Betsy Burton, vice president and research director for Gartner. "However, most vendors' strategies will be impacted by this pivotal event in the next two years. Applications users should accordingly evaluate if and how, in light of this event, their current providers will support them."

Gartner analysts said companies can't sit on the sidelines and wait for the decision on these acquisition activities. Companies must use this time to evaluate the best course of action regardless of the merger outcome. Enterprises should create a decision framework such as those developed by Gartner for PeopleSoft and J.D. Edwards prospects and clients to decide how to proceed.

"While uncertainty lingers, Gartner has been advising clients to not simply stop all PeopleSoft and J.D. Edwards deployment activities," Burton said. "Assess your risk tolerance, coupled with your assessment of the likelihood that Oracle will complete the PeopleSoft acquisition. Once understood, if appropriate, take specific action based on where you are in the application life cycle."

Gartner analysts said specific short-term advice will vary for enterprises that are starting to consider enterprise resource planning (ERP), customer relationship management (CRM) or other PeopleSoft or J.D. Edwards applications, compared to advice for those with applications that are live or planning upgrades.

Gartner analysts said this event will have a broad market impact, not only in business applications, but in other applications and infrastructure software segments as well. There are strong market forces at play that go beyond the immediate potential merging of two competitive vendors potentially reshaping the market for application software.

While some of these mergers may or may not occur, Gartner analysts said it does not appear that these acquisitions will result in a change of market leadership. "In 2002, SAP accounted for 19.6 percent of worldwide enterprise application software (EAS) new license revenue (see Table 1)," said Tom Topolinski, vice president for Gartner's worldwide software applications research group. "While Oracle attempts to acquire PeopleSoft, and PeopleSoft tries to attain J.D. Edwards, neither acquisition would be able to replace SAP's leadership position, based on 2002 new license revenue."

Table 1

EAS New License Revenue Market Share Estimates for 2002

Company                         2002 Market Share   2001 Market Share
                                              (%)                 (%)
----------------------------------------------------------------------
SAP (ERP, SCM, CRM)                          19.6                17.0
Siebel (CRM)                                  7.1                 9.0
Oracle (ERP, SCM, CRM)                        6.1                 6.8
PeopleSoft (ERP, SCM, CRM)                    4.9                 5.1
Sage (ERP, CRM)                               3.5                 2.9
Microsoft (ERP, SCM)                          2.7                 2.3
J.D. Edwards (ERP, SCM, CRM)                  2.4                 2.0
----------------------------------------------------------------------

Note: Based on new license revenue only (does not include maintenance and service revenue).

Source: Gartner Dataquest (July 2003)

In-depth analysis by Gartner on the Oracle/PeopleSoft acquisition is available on Gartner's Web site at http://www.gartner.com/pages/story.php.id.8813.s.8.jsp. The special Web section includes the latest research from Gartner on the merger activity and overall opinions on the most recent market activities.

Gartner analysts will provide additional insight about the merger activity during the teleconference "Oracle, PeopleSoft & J.D. Edwards: How They Could Affect Your Business." Gartner analysts will discuss how Oracle's bid and possible takeover could affect the market and customers, as well as the impact on PeopleSoft's planned acquisition of J.D Edwards. More information about the teleconference is available at http://www.gartner.com/teleconferences/asset_9227.jsp.

About Gartner

Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients leverage technology to achieve business success. Gartner's businesses are Research, Consulting, Measurement, Events and Executive Programs. Founded in 1979, Gartner is headquartered in Stamford, Conn., and has more than 3,800 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide. Revenue for calendar year 2002 totaled $888 million. For more information, visit www.gartner.com.