The offer covers licensing of business applications such as accounting and payroll, and the first year of support programmes, Microsoft said. PeopleSoft became part of Oracle last week in a US$10.3 billion takeover after an 18-month battle.

Microsoft is courting PeopleSoft customers worried that Oracle will not keep providing upgrades and other support. The discount follows an e-mail message in December, suggesting that PeopleSoft clients switch to Microsoft's database software. If successful, the tactic would impede efforts by Oracle Chief Executive Larry Ellison to keep PeopleSoft's 12,750 customers.

"Everyone is going in for the kill here," said Charles Di Bona, analyst at Sanford C. Bernstein & Co in New York, ranked as the No 2 software analyst by Institutional Investor magazine. "The competitors are not going to sit around and play nice. Oracle overpaid for PeopleSoft and one of the reasons I think is that there's going to be some attrition among customers."

Oracle shares fell 14 US cents to US$13.19 at 4 pm New York time in NASDAQ Stock Market composite trading. Microsoft rose 13 US cents to US$26.80.

Oracle is the No 2 maker of business applications software, behind SAP AG. Microsoft sales of business applications programmes rose 18 per cent to US$667 million in the year ended June 30, less than Microsoft had hoped. On June 3, Microsoft said CEO Steve Ballmer would take direct oversight of the unit, called Business Solutions.

Oracle spokeswoman Deborah Lilienthal declined to comment. The company has said it will support PeopleSoft products until 2013. Oracle announced last week that it's working on software that will combine features of both company's programmes, to be delivered within three years.

Microsoft has "the opportunity to have some substantial movement" among PeopleSoft customers, said Microsoft Business Solutions Marketing Vice-President Tami Reller. Microsoft and its partners have offered a similar discount on a case-by-case basis to customers of JD Edwards & Co, a software maker acquired by PeopleSoft in 2003, he said.

"Businesses that use PeopleSoft technology are facing some difficult choices today, and we're committed to providing them with the best options for moving forward," Doug Burgum, senior vice-president for the business applications group at Microsoft, said in yesterday's statement.

Microsoft's business applications group focuses on customers with less than 1,000 workers. PeopleSoft's 2003 purchase of JD Edwards & Co gave it some of the smaller customers that Microsoft typically targets.

Microsoft may not get a lot of JD Edwards-PeopleSoft customers to replace existing programmes now, but those customers may switch over when they get ready to buy new software, said Bruce Richardson, an analyst at Boston-based AMR Research Inc.

(Source: China Daily/ by Dina Bass)