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No. of Recommendations: 6
If we are to believe those figures and if this is no fluke, and we have no reason to suppose, then Siebel will not be a gorilla in 2 quarters time.

I wouldn't take those numbers at face value. When companies want to appear strong in a given market segment, they often "pad" the selling price of their offering when delivering an end-to-end solution for that segment at the expense of their other product lines.

For example, suppose Oracle happens to sign a multi-million dollar deal with a major Fortune 500 company. The deal, which involves the sale of Oracle's relational database management and CRM software, is valued at $12 million altogether. This Fortune 500 company is primarily signing the deal to get Oracle's industry-leading 8i database management software, and would've been willing to pay $10 million for this by itself. However, Oracle, realizing how competitive the CRM market is, decides to throw in a partial implementation of its CRM software for an additional $2 million. Their customer's perfectly happy with Siebel's software, and still doesn't end up using Oracle's CRM offerings in their primary offices, but since the price was so low, they decide to take up Oracle's offer and implement its CRM products in certain branch offices.

So the customer pays $12 million for all of this, and in its mind, is forking over $10 million for the database software, and $2 million for the CRM software. However, it doesn't have to show up on the books like that. In order to make its numbers look good, Oracle can say that they charged $5 million for the database software, and $7 million for the CRM software. The customer doesn't care about this, since it's paying the same amount of money either way.

I remember reading the posts of a number of IT types at Silicon Investor expressing incredulity at Oracle's CRM sales numbers from a couple of quarters ago, given the company's sub-par offerings when comapared to Siebel's. For this reason, combned with how companies are capable of cooking their books in the manner that I previously described, I'd take these revenue claims of Oracle's, not to mention EMC's claims about sales of its Celerra NAS product line, with a healthy dose of skepticism.

Eric
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