Frankly, I'm stunned that this deal has actually come to pass. When it first surfaced a year and a half ago, I—and many others—saw the whole thing as a rather obvious ploy to sow confusion in the ranks of PeopleSoft customers. By publicly threatening to buy the company, fire most of its workers, deep-six its products, and convert its users to Oracle products, Ellison could wreak havoc while hardly spending a penny.

You know, I still believe that was Ellison's original intention. But somehow the concept took on a life and momentum of its own. From poison pills and court disputes to bitter personal attacks, nothing was able to derail this merger that no one actually wanted. In the end, Oracle couldn't give up. Instead it bumped up last month's "best and final" $24-per-share offer to $26.50, leading analysts to charge that Ellison overpaid. That's a very long way from a low-budget PR assault.

So, as of January, Ellison will finally have his very own bright and shiny new $10.3 billion toy—complete with some 12,000 new employees and more than 12,000 new customers. He now helms the world's second largest application software company, after Germany's SAP.

A Changing Tune
Lots changed along the way, of course. Ellison has changed his tune on what he plans to do with PeopleSoft so many times it's difficult to know what to believe. For the record, he now says that the combined company will continue to enhance the existing PeopleSoft 8 and develop PeopleSoft 9. He also says it will support the current release of applications from J.D. Edwards & Co. and develop a future version 6 of that application suite, which PeopleSoft bought in July 2003—partly to fend off Oracle's advances. And Ellison insists that users of PeopleSoft applications will receive the same support that owners of Oracle's own applications receive. He claims Oracle won't force PeopleSoft users to migrate to Oracle apps, though it has plans to encourage them to move to a "merged product line." Details are still sketchy, but since Oracle won't actively market PeopleSoft apps, their long-term future remains very much in doubt.

As for the staff, Oracle is no longer promising to dump the majority of PeopleSoft's employees. But it isn't promising to keep them, either. At least any fired workers won't be alone. The dustup has already cost the job of former PeopleSoft CEO Craig Conway.

A Bad Deal?
And for what? This deal is bad for almost everyone. It was nasty when it was just trying spread FUD and now that it's a reality, it's worse.

If they want to stay current, PeopleSoft and JD Edwards customers are likely going to have to abandon the products they now use. Maybe not right away, but eventually. Oracle customers will lose competitors that used to offer alternatives that helped keep Oracle in line. It's also not good news for Oracle competitor IBM, which recently inked a big distribution deal with PeopleSoft.

Meanwhile, a hefty chunk of PeopleSoft's workforce—and probably a good number of Oracle employees—will lose their livelihoods. Oracle shareholders will spend $10.3 billion and it remains to be seen whether they'll get their money's worth. The combined company faces a multitude of challenges

PeopleSoft shareholders, of course, will be crying all the way to the bank. SAP, which still dominates the enterprise apps market, is also expected to do well in the post-merger environment. And Larry Ellison can revel in the knowledge that even his idle whims can end up transforming the application software market.

He should enjoy it while he can. With his plate piled as high as his head, and a fork and spoon in hand, Ellison has gotten what he asked for. Now we get a chance to see how much he really likes it.

Fredric Paul is editor-in-chief of TechWeb.

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