Maintaining fees

SOMETIMES a tackle says much about a match and even the entire season. This is the case with a trial that opened on November 1st, pitting the world's two biggest makers of corporate software, Oracle and SAP, against each other. The dispute goes back to SAP's purchase in 2005 of TomorrowNow, which provided maintenance services for some of Oracle's software. Its aim was to poach customers. But in 2007 Oracle sued SAP, alleging that TomorrowNow had made illegal downloads from its website.

SAP has since admitted that TomorrowNow had done wrong and closed it down. It will not even contest allegations that it was aware of the copyright infringement and has reportedly agreed to pay $120m in legal fees to Oracle. This essentially leaves only two questions open: the damages—SAP thinks $40m is enough; Oracle wants about $2 billion—and whether Léo Apotheker, SAP's former boss and now head of Hewlett-Packard (HP), will appear in court.

As a result, it will be up to another trial to answer the underlying question: what are the rules for third-party maintenance? In January Oracle sued another maintenance firm, Rimini Street. It has since countersued, accusing Oracle of anticompetitive behaviour.

The issue is the same as with independent car-repair shops: what access to the intellectual property of the original vendor should they have? If the court favours Rimini Street and others, their business could take off. A growing number of firms are thinking about defecting from Oracle and SAP, even though they would no longer get regular updates. They are happy with their existing applications and could cut their maintenance costs in half.

If many customers jump ship, this would weigh heavily on the results of Oracle and SAP. Maintenance fees, usually 22% of a program's price per year, have become a bigger part of firms' technology budgets and of software vendors' income. For both firms, maintenance generates twice as much revenue as software sales—and all of the profits.

Yet if the TomorrowNow trial has attracted so much attention, it is also because of a new epic rivalry in the industry. It started when Oracle bought Sun Microsystems last year, becoming a direct rival to HP. Things got worse in September when Oracle hired HP's ex-boss, Mark Hurd, who had been pushed out the previous month. The relationship became downright hostile when HP then appointed Mr Apotheker as successor and installed as chairman, of all people, Ray Lane, who left Oracle in 2000 after falling out with its flamboyant boss, Larry Ellison.

Mr Ellison, who has shown restraint in recent years, has since rediscovered his previous more belligerent form. He compared HP's board to “idiots” when they forced Mr Hurd out. He spoke of “madness” after Mr Apotheker's appointment. Later he accused HP's new boss, who started his new job on the first day of the trial, of having “overseen an industrial-espionage scheme”.

All this has entertainment value. And it may impress Wall Street. But it is unlikely to make firms buy more of Oracle's products. Nor will it do anything to counter the growing anger among customers of Oracle (and of SAP, for that matter) over how much they pay in maintenance fees, with so little in return.