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Siebel's reign ends as shareholders approve acquisition

Siebel's shareholders approved Oracle's acquisition of their company, further shrinking the number of enterprise CRM vendors and setting up a battle between SAP and Oracle.

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Siebel System's lengthy run as the leader in enterprise CRM came to a quiet close in a San Mateo, Calif. hotel Tuesday as shareholders approved the sale of the company to Oracle Corp. for $5.85 billion.

The decision was nearly unanimous with 98.73% of shareholders voting in favor of selling to Redwood City, Calif.-based Oracle at a price of $10.66 per share. The votes were tabulated Tuesday afternoon in a short meeting.

The vote brings an end to the company that was a pioneer in enterprise applications and helped establish CRM as it is known today. It also strengthens Oracle's efforts to take on rival SAP in the applications arena by bringing Siebel's 4,000 customers and 3.4 million CRM users aboard. In the past two years Oracle has added CRM functionality from PeopleSoft, J.D. Edwards & Co. and now Siebel, through acquisitions that in total reached $17 billion.

"Clearly it gives Oracle a much richer set of functionality than it had before and the ability to build off an installed base," said Scott Nelson, vice president and distinguished analyst with Stamford, Conn.-based Gartner Inc. "It puts them in a stronger position. On the down side, the challenge is they have a lot of disparate apps. They've got some issues to work through in the market."

Oracle intends to marry the best of the functionality from all its recent acquisitions into one suite under Project Fusion

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 "Siebel's expertise with industry-specific, customer-facing applications combined with rich analytics will not only serve as the centerpiece of our CRM strategy for Oracle Fusion Applications, but can also be used to extend our current customers' investments today," Charles Phillips, Oracle's president, said in a statement released yesterday. Siebel's efforts to develop CRM software based on Web services align with Project Fusion already, according to Oracle. Last month, Oracle assured customers that Project Fusion is on target and halfway complete.

However, some skepticism remains.

"Still, the biggest issue is how it all fits together," Nelson said. "Fusion has been more a statement of future intent than truly flushed out. Some clients are going to be hesitant."

Tom Siebel, founder and CEO of Siebel Systems, briefly thanked his company's shareholders following yesterday's vote. In first announcing the acquisition, Siebel conceded that customers are looking for an "integrated family of applications." However, it may not mean the end of CRM.

"I think you're going to see the backfilling of small players with industry specificity -- such as Telco or health insurance solutions," Nelson said. "It's going to become increasingly difficult for SAP and Oracle to push forward. The best way for small players to compete is to provide deep functionality in niche markets."

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