SAP suffers peer pressure

Not selling what it should

SAP upset financial analysts this week with a set of disappointing, preliminary second quarter figures that showed rivals gaining on the firm.

The business applications giant lost market share of "one or two percentage points in the second quarter" to its "peer group," SAP chief executive Henning Kagermann said Thursday. Kagermann added that SAP continues to gain in terms of total market share and had not lost any deals to rivals.

Kagermann unveiled preliminary second-quarter software revenue growth of eight per cent to €621m ($791.16m) compared to the first quarter, putting SAP below expectations of €675m ($859.95m). Shares in SAP subsequently fell by seven per cent in afternoon trading.

SAP is facing competition from both Microsoft and Oracle. While Microsoft is seeing growth from its own ERP and CRM applications, it is still very much in the midst of developing a coherent business applications strategy. That makes Oracle the bigger threat, and Larry Ellison’s company has been gunning for SAP on the back of a string of acquisitions, including Siebel.

Announcing results earlier this year, Oracle was quick to point out 100 per cent year-on-year license revenue growth in Europe, SAP's strongest geographical region and home base. "It's very satisfying to be doing well right in SAP's backyard," Oracle president Charles Phillips said in a statement at the time.®

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