May 11, 2005 10:26 AM PDT

IBM and Lawson cozy up

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IBM and software partner Lawson Software buttressed their alliance on Wednesday with an agreement to jointly sell business systems to midsize companies.

Under the terms of the agreement, Lawson will incorporate IBM's WebSphere program into the next major release of its business applications. The Lawson release, code-named Project Landmark, will be Java-compatible. Lawson has also agreed to resell other IBM "middleware," including its DB2 database program and its Rational and Tivoli products, along with a new release it plans to deliver by June of next year.

The companies also plan to jointly tailor their business systems to companies in specific industries, offering features for health care, retail, government, education and banking customers.

The companies promised that the result of their work will be business systems built with the latest Java programming standards for fewer programming hassles and bugs.

Lawson, based in St. Paul, Minn., specializes in software designed to handle accounting, staffing, sales and production tasks for medium-size businesses. Its rivals include Oracle, SAP and Microsoft.

The pool of companies that sell such programs is shrinking. Oracle reduced its size this year by acquiring two major players, PeopleSoft and J.D. Edwards, and it doesn't plan to stop there. Oracle held merger discussions with Lawson a few years ago, but the companies never pursued the deal. More recently, it's been rumored that Oracle and Siebel Systems have considered combining forces.

The acquisition trend is worrisome for IBM, an Oracle foe in several adjacent software markets. IBM relies on partnerships with software companies to fuel demand for its integration services, as well as its database and middleware products. An applications market increasingly dominated by Oracle that competes with IBM on the database front could hurt Big Blue's business.

Oracle's buying spree is helping drive several industry giants into each others' arms. Most notably, SAP and Microsoft recently strengthened their ties.


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