Quest is a 25-year-old company that last year reported $857 million in sales and a $44 million net profit. Its speciality is creating management systems for enterprise software.

One product is called SharePlex, and it’s described as an Oracle replication product that promises to make a live copy of an Oracle database without slowing down its operation and availability. Another product for the Oracle environment is Toad, a tool that automates a lot of the maintenance tasks associated with running an Oracle database. Toad appears to be a flagship product as there are a few other versions of it for Sybase and SQL Server. Quest also builds tools to manage and maintain some Microsoft products like SharePoint and Exchange.

Quest’s market cap was just north of $2 billion as of yesterday. On today’s word of deal talks, its shares surged by 95 cents, or nearly 4 percent, to $26.13. It has been the subject of regular speculation all year that it might be taken out in an acquisition and as a result its shares have inflated by about a third during that time.

The purported offer from Dell is one of several coming in response to Quest’s agreement to be acquired by Insight Venture Partners in a deal to go private at $23 a share. The deal’s terms provide for a “go shop period” that allows the company to basically shop around for a better offer. It may get one. J.P. Morgan values Quest at $28 a share based on its sales and cash flow alone.

Also, Quest is right in the wheelhouse of the sort of things that Dell is trying to emphasize as it seeks to transform itself into an enterprise hardware, software and services concern, and de-emphasize its reliance on its traditional PC business. By at least one metric, that strategy is working — a little. Dell’s consumer PC business, for which it is best known, amounts to about one-fifth of revenue, while its enterprise-oriented businesses amount to about 50 percent. The wrinkle is that the enterprise bit includes PCs.

That deal had something of a transformative effect on the cloud software landscape. Soon, other players in its niche were snapped up. Oracle acquired Taleo for $1.9 billion, and Salesforce.com acquired Rypple. Meanwhile, Workday is growing fast and prepping for what looks to be the biggest IPO of the second half of the year.

So back to SuccessFactors. A quick look at the infographic below gives you some idea of the outsized impact it has had on the wider world. SuccessFactors alums are in senior positions at companies as varied as Okta, Pandora, Workday and Marketo. It sounds cool, but looks a lot cooler when presented in a snappy infographic like the one below. Click on it to make it bigger.

Bloomberg News is reporting that the jury has been dimissed, and that there will be no third phase of the trial, which was to have focused on damages in the event that Oracle prevailed.

The win for Google in the patent phase comes on top of a narrow but hollow victory for Oracle, in which the enterprise software giant won a part of its argument, but failed to make it stick in a way that would make any difference to either company.

Asked to decide whether Google had infringed upon Oracle’s copyrights to certain parts of the Java programming language, the jury — the same jury that came out in Google’s favor today — agreed that it had. Then asked to decide on four specific examples of that infringement, jurors could agree on only one that cracked the threshold of being sufficiently egregious to warrant any damages. And in that case, the damages amount to no more than $200,000, probably less than it cost to litigate in the first place.

Google shares rose slightly by $2.09 to $602.89 or less than 1 percent. Oracle shares fell slightly by 6 cents to $26.30.

Oracle put out this statement:

Oracle presented overwhelming evidence at trial that Google knew it would fragment and damage Java. We plan to continue to defend and uphold Java’s core write once run anywhere principle and ensure it is protected for the nine million Java developers and the community that depend on Java compatibility.

Meanwhile, here’s Google’s statement, which reads like a victory lap:

Today’s jury verdict that Android does not infringe Oracle’s patents was a victory not just for Google but the entire Android ecosystem.

Ariba operates something called a buyer-seller network that’s aimed at helping companies manage their supply chains more efficiently. The price amounts to a 20 percent premium on Ariba shares, which closed yesterday at $37.64 a share. Ariba reported sales in the year ended September 2011 of $444 million and a profit of $33.3 million.

It’s the second big cloud deal for SAP in recent memory. In December it spent $3.4 billion to acquire SuccessFactors, a player in the cloud-based human resources software business. That deal flipped the switch on a wave of acquisitions by Oracle, which soon acquired Taleo, and Salesforce.com, which bought the start-up Rypple in response.

Here’s the announcement below.

SAP to Expand Cloud Presence with Acquisition of Ariba
Combination Creates the Business Network of the Future;
Provides Open Business Commerce Community and Procurement Solutions in the Cloud;
Network to Benefit from SAP’s Flagship In-Memory Platform, SAP HANA

WALLDORF, Germany and SUNNYVALE, Calif., May 22, 2012 /PRNewswire/ — SAP AG (SAP) and Ariba, Inc. (ARBA) today announced that SAP’s subsidiary, SAP America, Inc., has entered into an agreement to acquire Ariba, the leading cloud-based business commerce network, for $45.00 per share, representing an enterprise value of approximately $4.3 billion. The acquisition will combine Ariba’s successful buyer-seller collaboration network with SAP’s broad customer base and deep business process expertise to create new models for business-to-business collaboration in the cloud.

The Ariba board of directors has unanimously approved the transaction. The per share purchase price represents a 20% premium over the May 21 closing price and a 19% premium over the one month volume weighted average price per share. The transaction will be funded from SAP’s free cash and a €2.4 billion term loan facility. The transaction is expected to close in the third quarter of calendar year 2012, subject to Ariba stockholder approval, clearances by relevant regulatory authorities and other customary closing conditions. The transaction is expected to be accretive to SAP’s non-IFRS earnings per share in 2013.

Business Network to Drive Growth

With the addition of Ariba, SAP will acquire the leader in cloud-based collaborative business commerce. The acquisition establishes SAP as the leading business network, adding business-to-business collaboration to its existing solutions. The move positions SAP in a fast-growing segment as buyers and sellers across the globe connect in new ways through the cloud.

SAP’s entry into the inter-enterprise business network space significantly expands its growth opportunities and accelerates its momentum in the cloud. Last week, SAP announced the roadmap for its cloud applications business (Software-as-a-Service), focusing on managing customers, suppliers, employees, and financials, in addition to its cloud suite offerings SAP Business ByDesign and SAP Business One. The acquisition will also significantly boost SAP’s cloud applications portfolio with the addition of Ariba’s leading cloud-based procurement solutions.

Headquartered in Sunnyvale, California, Ariba has approximately 2,600 employees. The company is the leader in cloud-based collaborative commerce applications and the second-largest cloud vendor by revenue. Ariba combines industry-leading technology with a web-based trading community to help companies discover, connect and collaborate with a global network of partners – all in a cloud-based environment. With $444 million in total revenue, Ariba experienced 38.5 percent annual growth in 2011. Its business network recorded 62 percent organic growth in the same period.

“The cloud has profoundly changed the way people interact. The impact will be even greater as enterprises connect and collaborate in new ways with their global networks of customers and partners,” said SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe. “Cloud-based collaboration is redefining business network innovation, and we are catching this wave in the early stage of its evolution. The addition of Ariba will create the business network of the future, deliver immediate value to our customers and provide another solid engine for driving SAP’s growth in the cloud.”

Businesses to Benefit from Combination

Industry experts estimate the cloud-based enterprise network and procurement segment at a current size of $5 billion in revenue. The Ariba network is the largest and most global trading network, connecting and automating more than $319 billion in commerce transactions, collaborations, and intelligence among more than 730,000 companies. SAP’s global customer base of more than 190,000 companies includes the largest buyers and sellers in the world, offering great potential to increase the number of participants, as well as the volume and types of transactions conducted through this network. Already today 63% of the world’s transaction revenue touches an SAP system. SAP and Ariba will facilitate collaborative commerce within and between companies of all sizes.

The combination of SAP’s innovations and core applications with the Ariba cloud-based network will create new business value for customers:

Together, SAP and Ariba can deliver a truly end-to-end solution that enables companies to achieve a closed-loop from source-to-pay, regardless of whether they deploy in the cloud, on-premise or through a combination of both.

Ariba’s open network and SAP’s integration expertise will facilitate participation and extend the benefits of business collaboration to all companies, on any system, from any provider.

The Ariba network will benefit from the performance delivered by using SAP’s flagship in-memory platform SAP HANA.

Relationship and transaction information from commerce activity in the Ariba network together with SAP’s leading analytics will provide real-time insights to enable trading partners to discover, connect and collaborate more effectively.

All SAP customers will be able to easily connect to the business network through pre-built integration points.

Through the combination of the business network procurement solutions from Ariba and SAP, organizations can gain 360-degree business intelligence and effectively demonstrate that spending activities, contracts, and supplier interactions adhere to corporate compliance guidelines.

“In our personal lives, networks are playing an increasingly important role in how we connect, share, and shop – bringing more insight and efficiency into everything we do,” said Bob Calderoni, CEO, Ariba. “Businesses are looking for the same connectedness, insight, and efficiencies in the processes and collaboration with customers, suppliers, and partners beyond the walls of their companies. By combining Ariba’s open global trading network and SAP’s solutions and analytics, we are ushering in a new era of business-to-business collaboration and driving new levels of productivity.”

Upon completion of the transaction, it is planned to consolidate all cloud-related supplier assets of SAP under Ariba. The existing management team will continue to lead Ariba, which will operate as an independent business under the name “Ariba, an SAP company.” The SAP Executive Board intends to nominate Ariba CEO Bob Calderoni to the SAP Global Managing Board after closing of the transaction and subject to the approval of the SAP Supervisory Board.

How serious? Does $2.2 billion and 15 percent EBIT profits sound serious to you? It does to me, and also to Deutsche Bank analyst Chris Whitmore.

Having slogged through Oracle’s 72-page document dump with a better eye for detail than mine, Whitmore noticed a line in a January 2010 email from Dave Donatelli, now head of HP’s Enterprise Group (specifically Exhibit 17, for those who want to scroll through and find it) saying that HP’s Business Criticial Server business combined with its Technology Services business, which includes the support and services associated with the Integrity line of servers that uses the Intel-made Itanium chip, was at that time larger on a revenue basis than HP’s personal computer business.

The same document, he says, showed that at the time, HP’s “owned operating profit” for the combined hardware, software and services tied to the business of selling and supporting Itanium servers was about $2.2 billion. All in, HP derives — or at least at that time derived — about 15 percent of its profits on an EBIT basis from Itanium and related businesses.

No wonder, then, that HP considered Oracle’s March 2011 decision to stop creating software that runs on the Itanium chip so earth-shattering that it hauled the software giant into court last June. That case is expected to head to trial any day now.

The disclosure is the clearest sign yet of how much HP stands to lose if its Business Critical Server business can’t recover. It has always been known to be a highly profitable business; exactly how profitable was a closely guarded HP secret. But sales of Business Critical hardware have been on the decline. In 2009, sales of BCS hardware were $2.6 billion. In 2011, they had fallen by 19 percent to $2.1 billion. And in the quarter ended Jan. 31, sales were $405 million, down 27 percent from the same period in 2011.

The uncertainty about Itanium’s future is one of the many reasons that Whitmore has been particularly bearish on HP’s turnaround prospects: “Given the growing uncertainty around the long-term viability of Itanium, we expect customer defections to continue, if not accelerate in future periods,” he wrote in a research note to clients, issued yesterday.

However, much as HP lawyers would like to argue that Oracle’s motivation is to help bolster long-flagging sales of its new Sun Microsystems hardware unit, Whitmore argues that the main benefactor is IBM: “While Oracle is responsible for shining a bright light on Itanium’s precarious future, it is probably doing IBM the biggest favor. … We expect IBM to be the greatest beneficiary of Itanium defections and view Power [IBM's server chip] as the market consolidator and eventual standard in the UNIX/RISC server market over the medium to longer term.”

And even if HP prevails in its suit, Whitmore isn’t seeing much benefit: “Regardless of the outcome of this particular suit, we expect HP-UX customers to continue fleeing what is increasingly looking like a dead platform — creating a major headwind for HP’s medium-term earnings.” Ouch.

They’re not quite as juicy — Oracle has always had the better flair for the dramatic in this case — but in releasing them, HP clearly intends to paint Oracle, the new owner of Sun Microsystems, as out to hurt HP by kicking it straight in the teeth by damaging its Business Critical Server operation.

The first of the batch is an instant message exchange between some Oracle sales guys, who happen to use salty language in relation to HP. (Sorry about that.)

The second appears to show that Mark Hurd, while still CEO of HP, was informed about Intel being both aggressive and excited about a forthcoming version of the Itanium chip, which would seem to run contrary to the argument Oracle has made that Intel was prepping for the Itanium line’s end of life, while allowing HP to lie about it to its server customers. In the message, Martin Fink, who figured so prominently in Oracle’s document dump today, writes to Hurd: “I’m not sure what exactly this means, but I have rarely seen Intel so agressive on anything to do with Itanium EVER, and they are working very hard to get this moving forward.”

Another, from February 2011, appears to show Oracle unwilling to release a security software patch for a version of one of its applications that runs on HP-UX and therefore on an Itanium-based server. Another from the same day is an email from Oracle CEO Larry Ellison to Thomas Kurian, senior vice president of Oracle’s server technologies, asking if support documents had been updated to specify “no more one-off patches for Itanium.” The date is key because Oracle first announced that it would no longer support Itanium systems on March 23 of that year. It should surprise no one that the top echelons of Oracle management knew this announcement was coming.

The next is an email showing HP getting ready for a big strategy launch. “Kinetic” was HP’s internal name for a strategy that leveraged all of HP’s IP that enabled mission-critical products into a cohesive whole. Plans for Kinetic included extending HP-UX and Integrity, HP’s line of Itanium-based servers, indefinitely, as well as bringing up X86 chips, like Intel’s more mainstream Xeon, under the “mission critical” umbrella. As HP sees it, this was the plan all along.
 
Finally the last one is another IM exchange between Oracle sales execs. Toward the end, one of them complains about being forced to sell Sun hardware that is described as a “pig with lipstick at best.” Again as HP sees it, once Oracle owned Sun it had every motivation to do whatever it could to hurt HP, including ducking out of previously contracted commitments.

As I did with the Oracle dump this morning, I collated everything into a single PDF. I think I got everything in chronological order this time. Read for yourselves!

HP-Itanium-docs.pdf

The documents were released as part of a new offensive by Oracle to ratchet up the pressure on HP and take its case to the marketplace — that HP and Intel had already planned to bring an end to the Itanium chip’s life, and that HP lied to its customers about the chip’s long-term future.

HP has long denied Oracle’s contention, and has tried to portray this as Oracle’s failure to live up to its end of a contract.

In an open letter to affected customers, Oracle said it was releasing the documents in order to allow customers to “make your own decision” on the matter:

Dear Customer:

A little over a year ago we announced that we would no longer be developing new versions of Oracle’s database and other products on the Intel Itanium platform due to our strongly held belief of Itanium’s imminent end of life. We ensured our Itanium customers would have an easy transition to the platform of their choice by committing to 10 years of support for existing Oracle software running on Itanium.

Hewlett Packard strongly disagreed with our characterization of Itanium’s future and launched an immediate campaign designed, in their words, to foment “customer outrage.”

At this time, there are many documents that have been disclosed through litigation that describe the true state of Itanium in Hewlett-Packard’s own words. Rather than us interpreting this situation for you, we thought we would give you access to the public HP documents so you can make your own decision regarding your investments in Itanium technology.

After reading these documents we are confident that you will agree with our decision, taken with the best interest of our joint customers in mind.

Sincerely,
Jeb Dasteel, Senior Vice President and Chief Customer Officer
Oracle

Bloomberg Businessweek got its hands on some of these trial exhibits, but in its posts this morning — and presumably in the tech section of this week’s magazine — stuck to a fairly limited set of highlights. And in fact there’s not so much that’s surprising, if you read my story on the unredacted version of Oracle’s cross-complaint from January.

Basically, the new documents add more color and a lot more tension to the state of the HP-Intel relationship over the production of the Itanium chip. It also lends a lot of weight to Oracle’s narrative heading into that trial: That HP relied heavily on profits earned from multiyear sales and support contracts with customers who bought its Integrity servers that run Intel’s exotic and expensive Itanium chip. In support of that, it paid Intel nearly a half-billion dollars to keep the chip alive, despite the fact that, outside of HP, there was no other single vendor using Itanium chips.

In the emails, Intel, for its part, certainly looks like it wants out of the business of making the chip, but is willing to accept HP’s money to keep churning them out. Asked at one point what would happen if HP didn’t pay a certain amount to Intel, Intel would — in the words of Martin Fink, then-head of HP’s Business Critical Server business — shut down the teams producing certain chips that were in the process of being designed, and slap “high fives all around.”

On its face, there’s nothing inherently wrong with HP paying Intel to keep making a particular chip. HP had customers willing to buy these servers, and it made money supporting them, so paying Intel to keep them coming — remember, HP for all intents and purposes, is the only vendor buying this chip — was more or less a cost of doing business.

However, Oracle’s argument has been that HP refused to play straight with the wider marketplace, insisting that Itanium would be around for many generations to come. Even Intel itself insisted that was true last year, when Oracle first announced that it would stop making new applications that support the chip, which of course led HP to sue last June.

AllThingsD has compiled all of these documents into a single 75-page document; you can read the entire collection below. They’re ordered by exhibit number rather than chronological order. I’ll probably have more to say as I go through them.

HP just sent a statement:

“Intel has provided unequivocal and repeated statements to the marketplace that Itanium is not at an end of life. The undeniable fact is there is committed support for Itanium that extends out toward the end of this decade. Statements that Itanium was at or near an end of life are false. With the unsealing of court filings, the public can see the undisputed facts of Intel’s Itanium roadmap clearly showing a long and sustained future for Itanium.”

An Intel spokesman had no comment, saying it is not a party to the lawsuit.

Update: So let me try to curate these documents a bit. They cover a time period beginning in August 2007, and go through to April 2011. In the first, (Ex. 6) Fink writes to another HP exec and says, “Intel dropped a bomb on us last night” during a meeting that included talk of “canceling Poulsen,” a future version of the Itanium chip that was on internal road maps. Poulson, for the record, is Intel’s code name for a 32 nanometer version of Itanium that was to be released sometime this year. The response: “Call Pat G,” referring to Pat Gelsinger, the once very senior Intel executive who was at one time widely considered to be a possible successor to current CEO Paul Otellini, but is now the COO at EMC, and likely to be its next CEO. Fink’s response: “I did, spent an hour … This was a high tension call.” Intel was worried that an HP server was being built using a competitor’s chip, presumably one from Advanced Micro Devices.

From there, skip forward to Exhibit 43. The email to Fink from Scott Stallard, now a retired HP exec, details a discussion with Intel’s Tom Kilroy, then VP of its enterprise business. The message to Intel: “Don’t possibly signal to the world” the end of the Itanium road map.

The next document is notes from a meeting between Intel and HP led by Otellini and then-HP CEO Mark Hurd in September of 2007. According to those notes, Intel’s Kilroy concedes that the then-current core used to build the Itanium chip has reached its end of life, and that there are two paths forward, one expensive, the other painful — a “crash landing.” Otellini then says that Intel can’t continue to lose money on the product. Hurd goes on to say that HP had by that time sold a combined $9 billion worth of Itanium-based servers, and that it “would be hard to walk away from those customers.”

Otellini then says, according to the notes, that “we need to address the inevitable on the future of Itanium.” Both sides then agree that over the next several years they’d like to glide toward using Intel’s more plentiful and more mainstream Xeon server chips, and essentially keep Itanium alive until 2013. Intel then proposed a new business model that would turn Intel essentially into a contractor for HP. Its goal would be not so much to make money on the Itanium business, but to stop losing money on it. Hurd agrees to take a serious look at the numbers.

Next in line is Exhibit 55, in which Stallard outlines the November 2007 Intel proposal to HP. The key point: HP would pay Intel $488 million over five years to keep building Itanium chips. It includes provisions for an annual “true up,” where Intel gets paid for any difference between its costs and what HP has already paid it for that year. Stallard writes: “So you ask, why should that be that we are forced to true up Intel to break-even? lt is because Tom [Kilroy] says Paul [Otellini] has been consistent on one thing all along, that if we do any other scenario than Tukvale (e.g. shut down the business early) then “Intel can’t lose any (more) money on this thing.’”

Next is Exhibit 15, a PowerPoint deck outlining the strategic rationale for HP to consider buying Sun Microsystems. Key phrase: HP-UX, its version of Unix developed specifically for Itanium servers, “is on a death march” because of Itanium’s inevitable demise. The slide also shows HP’s worries concerning a scenario in which IBM acquires Sun. The key phrase there: Such a deal “Isolates and exposes HP-UX as 3rd tier player, accelerates our decline (product/service) as customers look to consolidate vendors.”

We all know what happened instead: Oracle acquired Sun in 2010 and, in a stroke, took over its server business, giving Oracle an obvious motivation to cut its support for Itanium and hurt its new rival HP in the process. I’ve hit a few high points here, but I think you can get the gist from a careful reading of the documents below.

Update: I’ve re-uploaded the exhibits to Scribd in more logical order, so you don’t have to skip around. Sorry if that was confusing before.

Oracle Itanium Exhibits Chronological

New documents in the case came public yesterday, essentially spelling out Judge James Kleinberg’s ruling from May 1 in turning back Oracle’s motion for summary judgement. It’s not a terribly big deal, because both sides asked for summary judgement and failed to get it, as happens nearly all of the time in cases that get this far.

One key piece of their dispute arises from the fact that when they settled another lawsuit in 2010, stemming from Oracle’s hiring of former HP CEO Mark Hurd, there was, as HP argues, a provision included requiring Oracle to continue making software that supports servers running Intel’s exotic Itanium chip. A good deal of the fighting between the companies at trial is going to revolve around this point, and whether or not that agreement is enforceable or even exists. What that provision called for, essentially, was for Oracle to continue supporting Itanium as it had previously.

A key paragraph in the judge’s ruling:

“In the Court’s view, it is not unreasonable to interpret the Reaffirmation Provision as imposing a prospective obligation on Oracle to continue to offer products for HP’s platforms; the plain language is readily susceptible to that interpretation. If the prior, existing obligation before [Mark] Hurd’s hiring involved a clear and consistent practice in which Oracle offered its product suite on all HP platforms without written porting agreements or payments, then the Court sees no inherent contradiction in ‘reaffirming’ that this arrangement will continue going forward.”

Both sides in this case never miss an opportunity to poke each other in the eye with public statements. HP struck first last night:

“HP is pleased that the Court ruled that the language in the HP/Oracle agreement can be interpreted to require Oracle to continue porting its software products to the HP Integrity platform, as Oracle did for years before the agreement. As the ruling states, Oracle’s interpretation would make the agreement ‘illusory’ and ‘should be rejected.’ We look forward to trial, where the details of Oracle’s deliberate, anti-customer business strategy to drive hardware sales from Itanium to inferior Sun servers will be revealed.”

But it’s important to remember that HP lost its motion for summary judgement, too. Also, didn’t HP convince the judge that the Itanium provision of the Hurd settlement agreement means exactly what it thinks it does? At least that’s how Oracle attorney Dan Wall saw it, in a statement sent to AllThingsD this morning.

“HP cannot be happy with this decision. The Court did not accept HP’s interpretation of the Hurd settlement agreement; in fact, it rejected out of hand the most recent version of HP’s argument, which equated the contract with terms HP proposed, but Oracle rejected. HP’s lawsuit, like Itanium itself, is living on borrowed time and will never succeed.”

Anyway, the 29-page judge’s opinion that kicked off this latest pretrial PR salvo is below:

endorse_80790_203163_A

For years, the applications were traditional on-premise software — you’d run it on a server or a series of desktop machines wherever the people who used them happened to be. And the biggest players were — or rather, still are — Oracle, by way of its takeover of PeopleSoft, and SAP. But when these apps started to migrate to the cloud and be available on demand, things started getting interesting. Companies that used them started to love the functionality, the ease of use, maintenance and support, and also the lower cost, and they started voting with their purchase orders in favor of the cloud.

That’s when the established on-premise suppliers got grabby. Last year, the race to roll up the cloud players started in earnest when SAP spent $3.4 billion for SuccessFactors. Not long after that, Taleo, another cloud player, went to Oracle for $1.9 billion. And Salesforce.com nabbed Rypple. Meanwhile, a bunch of former PeopleSoft execs are building Workday into a credible threat to all of them.

So this makes today’s news from SilkRoad — yet another player in the cloud-based HR application business — all the more interesting. The company announced a $35 million Series C led by Keating Capital and NTT Finance, joining existing investors Intel Capital, Crosslink Capital, Foundation Capital, Azure Capital and Tenaya Capital. Customers include McAfee and International Paper.

Another reason for all the heat being generated by this low-profile sector: The market research firm IDC reckons that, by 2015, companies will spend north of $8 billion on human-capital management tools.

The company says the funding will support its international expansion plans, especially internationally. Its products currently support 18 languages, and there are plans to add to those.

The institute is studying ways to make things like lightbulbs that are 20 times more efficient than the ones we use now, and also ways to make computers — which are pretty good at hogging power — more efficient and fast. It’s also working with nanomaterials to make batteries better, pushing the edges on research into fuel cells.

Of the $50 million gift, $30 million will pay for a building to be called Henley Hall, which the university is describing as its base of operations and faculty recruitment. The rest will go directly to the College of Engineering to support its priorities.

The Institute for Energy Efficiency was created two years ago and already has 50 faculty members, five of them Nobel Prize winners, and 120 graduate and post-doc students collaborating on energy-efficient technologies. Henley was CFO at Oracle from 1991 until 2004, at which point he was elected chairman of the board. He graduated from UC Santa Barbara with an engineering degree in 1966. He’s also giving this year’s commencement address at the school.

Aneel Bhusri

Sources familiar with the company’s plans tell AllThingsD that Workday has chosen the four bankers that will lead it through the IPO process: Morgan Stanley, Goldman Sachs, Allen & Company and JPMorgan Chase & Co. The search for bankers caps a process begun in December.

The company’s IPO path calls for an S-1 filing to be made with the Securities and Exchange Commission by mid-July. After a late summer or early fall road show, its shares would debut between October and December, depending on how favorable market conditions are, sources familiar with the matter tell me.

The process began in earnest after Workday hired its new CFO, Mark Peek, away from VMware, where he was also CFO.

Workday is feeling emboldened in part by the successful offerings of Jive Software and Splunk, both enterprise companies with their hands in the cloud business. Workday itself is a pure cloud software play, specializing in human resources applications, a white-hot area of enterprise that has seen a lot of M&A activity of late.

In December, software concern SAP spent $3.4 billion to acquire SuccessFactors. Then, in February, software giant Oracle spent $1.9 billion to acquire Taleo, in a deal that took place shortly after I interviewed Taleo’s CEO. Even Salesforce got into the act, acquiring the start-up Rypple for an undisclosed amount in December.

Much of that dealmaking came in response to concerns about Workday, especially after its impressive $85 million Series F round of institutional funding at a $2 billion valuation, which AllThingsD reported exclusively in October. A Bloomberg News report said that round was oversubscribed and grew to $100 million when Michael Dell’s MSD Ventures joined.

Investors in that round included several who also took part in institutional rounds in Facebook and Web gaming player Zynga: T. Rowe Price, Morgan Stanley Investment Management, Janus, and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos. William Danoff, the manager of Fidelity’s $80 billion Contrafund, the mutual fund giant’s largest stock-based fund, also participated in that round.

A Workday IPO, which would raise about $500 million, would make for a sweet payday for the company’s earlier investors, which include Dave Duffield and Greylock Partners, who invested $90 million in four rounds, and New Enterprise Associates, which joined a $75 million Series E round in 2009. By my math, Workday’s total capital raised comes to a cool $195 million.

So how’s business? With the company having disclosed $160 million in billings total bookings in 2010, sources familiar with its operations tell me bookings in 2011 exceeded 100 percent growth. That would be above the $320 million in 2011 bookings CEO Aneel Bhusri told me he expected last October.

Workday is essentially the creation of PeopleSoft vets Bhusri and Duffield. They started the company in 2005, not long after losing a pitched battle to resist a $10 billion hostile takeover by Oracle. Bhusri and Duffield concluded that the next battlefield for enterprise software would be in the cloud. They kickstarted Workday using their own money and some funding from Greylock, and brought some PeopleSoft employees with them.

The idea was to re-create PeopleSoft, which makes software that businesses need to run day to day, but to deliver it from the cloud.

And unlike other cloud players that approach smaller companies and work their way up to ever-larger customers, Workday’s customers are already in the big leagues. The average Workday customer — there are 280 — has between 10,000 and 15,000 employees. The biggest is Flextronics, the huge electronics manufacturing company, which has 200,000 employees. Other customers include Time Warner, Thomson Reuters, Chiquita Brands and Salesforce.com. There are Workday records on more than two million employees on its system. All that after only four-plus years of active selling. A second, newer line of financial applications aimed at helping companies more efficiently manage their spending is getting traction, too.

Workday will probably be the biggest among a pending batch of enterprise-oriented IPOs set for summer and fall after the Facebook madness is over. For one, there’s Violin Memory, which I’ve been reporting on quite a bit. And Reuters is reporting that cloud storage and collaboration concern Box is looking like it’s eyeing an IPO in 2013. The bankers are going to be busy.

Asked to decide whether Google had infringed upon Oracle’s copyrights to certain parts of the Java programming language, the jury agreed that it had. But then, when asked to decide on four specific examples of that infringement, jurors could agree on only one: The rangeCheck method in TimSort.java and ComparableTimSort.java. Don’t ask me to explain exactly what it is, but it is being described widely as “nine lines of code.” And, unfortunately for Oracle, the damages it can collect are limited to somewhere in the neighborhood of $150,000 to $200,000, or less than pocket change for either company, not the $1 billion or more Oracle had said it wanted.

Jurors were also unable to decide if the portions of Java code that it copied could be protected by the long-established doctrine of Fair Use, under which certain infringements can be excused. Google lawyers pounced on this, and said they would move for a mistrial.

The conclusion is that Oracle proved at least part of its argument, but failed to prove the dramatic injury it said it had suffered. It also proved that Google knew that it needed a license to Java in order to use the portions of Java that it did use. The complication there was the fact that one flavor of Java is compatible with other flavors of Java: It still operates under the old “write once, run anywhere” principle that Sun Microsystems envisioned when it created Java. Oracle still wants Google to take out a commercial license that would require Google to maintain Java compatibility with other platforms.

Still undecided — and this is the big issue that has the eyes of the software industry watching this case closely — is whether Oracle can prevail on the issue of protecting software APIs using a copyright in the first place. Jurors were instructed to proceed under the assumption that this was a matter of settled law, when in fact it is not. Judge William Alsup will decide on this issue later, and it is unclear exactly how the jury verdict in the first phase of this case will affect his decision.

Had Oracle won a more ringing endorsement from the jury, that portion of the argument might seem to be stronger. It’s an important point that Google argued against, saying APIs shouldn’t be subject to copyright protection, because they’re more like tools and techniques that programmers use to build software. You can copyright a given program because it’s unique, but you can’t copyright the language it’s written in. The possibly strained analogy I came up with before is this: You can copyright a musical composition like Miles Davis’s “So What,” but you can’t copyright the form of music known as jazz.

Oracle argued at trial that copyright law offers the only proper protection for original expression in software, mainly because software advances are incremental, building upon previous advances and innovations. Laws governing trade secrets and patents don’t get the job done. Oracle lawyers contended that copyright law, while still imperfect, protects innovations and advances at a more granular level, but mainly against copying.

Also still ahead is the patent phase of the trial, where Oracle will assert that Google violated Java patents in building Android. After that, there will be a third phase, where the two parties will wrangle over damages. So far, it seems — unless Oracle prevails in the patent portion — that there won’t be much to wrangle over.

At least for now, it appears that Google has escaped the worst of Oracle’s accusations. That was the conclusion of shareholders of both companies. Google shares rose by more than 2 percent on the news of the verdict yesterday, closing at $607.55 a share. Oracle shares fell by more than 1 percent to close at $27.92 a share. The case isn’t over, and Google hasn’t exactly come out of it looking virtuous. But if the point of defending against a lawsuit is to escape paying huge monetary damages, Google won the day.

Embedded below is the filled-out jury questionnaire:

Verdict

As the AP has it, the jury has decided against Google on Oracle’s copyright claim, but has reached an impasse on some key questions. There’s obviously more to this story as it develops. I’ll be updating as soon as I know more.

Update: The jury sided in part with Oracle, ruling that the Android mobile operating system infringes on some Java copyrights. However, it was deadlocked over the question of whether that use constituted “fair use,” and was therefore protected. This impasse appears to be the basis for a mistrial motion that Google lawyers say they intend to file.

Oracle has not prevailed on every point and, in fact, it’s looking like a messy victory. The jury found code in two files to be infringing, and that some elements of Android application programming interfaces or APIs were similar to Oracle’s Java APIs.

Attorneys for Google told Judge William Alsup that they intend to file a motion for a mistrial because of the impasse over the “fair use” question. Alsup told both sides to be prepared to argue that motion, which will come later.

A few other things are coming up: Judge Alsup still has to rule on whether APIs can be copyrighted as a matter of law. Jurors were instructed to deliberate, assuming that they could be copyrighted.

There is a clear finding that Google has infringed on nine lines of code. This came in Question 3A, concerning something called RangeCheck in Java. They decided that Google hadn’t infringed on two other blocks of code. With the jury out of the room, Judge Alsup said that there is “zero finding of copyright liability” on anything other than the nine lines.

That’s good for Google, because Oracle’s own expert at trial said they’re not worth much. An Oracle attorney suggested that the company should receive a share of Google’s profits on top of regular damages. Judge Alsup rejected that as “bordering on the ridiculous.”

From Google:

“We appreciate the jury’s efforts, and know that fair use and infringement are two sides of the same coin. The core issue is whether the APIs here are copyrightable, and that’s for the court to decide. We expect to prevail on this issue and Oracle’s other claims.”

And here’s Oracle’s statement:

“Oracle, the nine million Java developers, and the entire Java community thank the jury for their verdict in this phase of the case. The overwhelming evidence demonstrated that Google knew it needed a license and that its unauthorized fork of Java in Android shattered Java’s central write once run anywhere principle. Every major commercial enterprise — except Google — has a license for Java and maintains compatibility to run across all computing platforms.”

For reference, I’ve embedded the questionnaire that the jurors were required to fill out:

Jury Questions

Judge William Alsup is starting to talk about opening arguments for phase two of the trial, which will focus on patents. A third phase, assuming Oracle prevails, will focus on determining damages.

There was a false alarm late Friday when CNET and Bloomberg News reported that a partial verdict had been reached, when in fact it hadn’t. This happened after it became relatively clear that jurors were stuck and unable to agree on all four questions they have been tasked with answering.

Jurors have been asked to decide if Google’s use of 37 sections of Java source code — which Oracle owns, having acquired Sun Microsystems in 2010 — constitutes copyright infringement; or if, as Google argues, the copied sections are so insignificant as to amount to “no big deal.”

Oracle sued Google in 2010, after closing the Sun deal. Google stands accused of using some parts of Java to create Android without having first obtained the relevant licenses — first from Sun, then from Oracle — that, among other things, required compatibility with other flavors of Java.

Jurors have reached no conclusion in the case and Judge William Alsup has sent them home for the weekend with instructions to try again on Monday.

The jury had indicated Thursday in a note to Alsup that it was stuck on some point. Alsup warned lawyers for both sides that they might have to prepare for a deadlocked jury. Obviously, the situation here is fluid. I’ll have more in this post as it comes in.

There are four questions the jurors are tasked to answer, and they’re said to be unanimously agreed on three of them, but unable to reach consensus on the fourth, though its unclear which are which.

For what its worth, below is the form with the four questions the jurors have to answer.

Jury Questions

The Associated Press reported that a note to Judge William Alsup asked what would happen if jurors were unable to come to a conclusion, and indicated that some jurors are not budging from their positions.

Alsup called jurors into the courtroom for a talk, then sent them home so they could “start fresh” today. Bloomberg Businessweek reported that Alsup told lawyers that it’s possible the jury is deadlocked. If that’s what happens, Alsup said, the parties would move immediately into the second phase of the trial, which covers patents.

Jurors have been asked to decide if Google’s use of 37 sections of Oracle-owned Java source code constitutes a copyright infringement, or if, as Google has argued, the copied sections are so insignificant as to amount to “no big deal.”

Oracle sued Google in 2010, after acquiring Sun Microsystems and becoming the owner of the Java programming language. Google stands accused of using some parts of Java to create Android without having first obtained the relevant licenses — first from Sun, then from Oracle — that, among other things, required compatibility with other flavors of Java.

The jury has been deliberating since lawyers for Google and Oracle wound up their arguments on Monday.

(Image courtesy of Icanhascheezburger)

The jury has had the case since Monday, and as yet there’s no indication of when its deliberations will be complete.

The basic questions jurors are wrestling with concern whether and how it is or isn’t okay for a company to copy portions of software code that would otherwise require a commercial license. Also looming large over the proceedings is whether or not a programming language can by itself by protected by copyright. Oracle lawyers argued at trial that it can, but this is by no means a legal slam dunk.

Google lawyers, for their part, argued that the copying was insignificant, or “no big deal whatsoever.”

Oracle sued Google in 2010, after acquiring Sun Microsystems and becoming the owner of the Java programming language. Google stands accused of using some parts of Java to create Android without having first obtained the relevant licenses, first from Sun, then from Oracle, a license that among other things required compatibility with other flavors of Java.

Once the jury comes back, which could be as soon as today (but we thought that earlier this week), the trial will shift to a second phase over patents. After that, assuming Oracle prevails in one or both of the first two phases, a third phase will determine the amount of damages, if any. The full trial is expected to last two months.

Lots of people are waiting on the outcome of this first phase, however. To all of them, I dedicate Tom Petty’s “The Waiting.”

The two companies had asked the judge essentially to throw out the other side’s complaint and rule in their favor in a pair of dueling filings last month, and made arguments to that effect in late March. Now being heard in a California State Superior Court, the case is going to trial, with no hope for a settlement, Reuters reported.

It all started up in late 2010, when in reaching a settlement of a lawsuit concerning Mark Hurd’s taking a job as co-president of Oracle, HP asked Oracle to include some language that it argues committed it to continue to build software that would support Intel’s exotic Itanium server chip. That chip, you may remember, was, for all intents and purposes, a market failure, and HP was the only vendor worth mentioning that ever made a go of selling servers using it.

In March of last year, Oracle said it would cease developing versions of its software that would work on Itanium-based systems, and argued that Intel had plans to end manufacturing of the Itanium chip. HP was outraged, and Intel said it had no such plans. Oracle was in earnest. HP got its Itanium customers to publicly lobby Oracle to reverse the decision. It didn’t work. So HP sued Oracle last June.

The pretrial arguments have been colorful. Oracle accused HP of being sneaky when it negotiated the Hurd settlement. It later compared HP’s ongoing reliance on Itanium to the movie “Weekend At Bernie’s,” the corpse in the analogy being the Itanium chip, kept alive by HP funding. For HP, the argument is a simple one: Is there an enforceable agreement between it and Oracle, or not?

Oracle argues, among other things, that there is no such agreement in place, and even if there were, HP was, at the time of the agreement, about to hire Léo Apotheker and Ray Lane as its CEO and chairman, two people who, for various reasons, Oracle thoroughly distrusts. Also, Oracle says, for HP, the Itanium business is all about the billions in support and service fees it charges its customers, fees without which HP is “strategically screwed.” And by the way, the uncertainty around Itanium servers is starting to hurt HP for real.

(Image is of this T-shirt)

In his appearance, McNealy said that, as he remembers it, Google was asked to take out a commercial license on Java. “There is a Java specification license document available,” he said, that didn’t contain any financial requirements, but it did require compatibility.

McNealy had been called as a witness by Oracle, and on the stand he said that it was Sun’s practice to let other companies use Java, but only with a commercial license, and that its primary requirement was that the licensee ensure that Java remain compatible.

While numerous other phones from the likes of Nokia, Research In Motion and Motorola were compatible with Java applications, those on Android weren’t. Compatibility is one of the main points over which Oracle has been arguing with Google. Oracle contends that not only did Google violate its patents and copyrights, but it then went on to build its own incompatible version of Java, fracturing one of the oldest premises of Java’s existence: Write once, run anywhere.

McNealy is also running a poll on Twitpolls, asking people to vote for which side they agree with. (Google is ahead as of this morning.)

Who is right in the Oracle vs. Google lawsuit? reply w/ #oracle #google #neither #both http://t.co/aWdhzPbO

May 1, 2012 1:44 pm via GetTwitPollsReplyRetweetFavorite

@scottmcnealy

Scott McNealy

And he promotes a similar poll on his own new venture’s site, Wayin.com, where, as of this morning, the vote is favoring Oracle.

Meanwhile, the jury is still out, and the world is still waiting for a verdict. It could come today.

Anyhow, here’s the video of McNealy’s six-minute TV interview:

The jury in the Oracle-Google trial will begin its second day of deliberations today, following a round of closing arguments by lawyers for both sides.

From Oracle’s perspective, the basic question jurors will have to answer, as its lawyer Michael Jacobs put it, is whether it’s okay for one company to use another company’s intellectual property without permission. (See Jacobs’ slide deck, embedded below.)

Google attorney Robert Van Nest argued that the amount of Oracle IP that it used was so small as to be “no big deal whatsoever.”

Oracle sued Google in 2010, after Oracle acquired Sun Microsystems and thus became the owner of its Java programming language. Google is accused of using some parts of Java to create Android without having first obtained the relevant licenses, first from Sun, then from Oracle.

Monday’s closing arguments constituted the end of the first phase of the trial, which has also turned into a closely watched battle of the proper use of copyrights over software.

Once the jury comes back, which could be as soon as today, the trial will shift to a second phase concerning patents, after which a third phase will determine the amount of damages, if any. The full trial is expected to last two months.

Judge William Alsup, in his final instructions to the jury, reiterated the parameters of the case, telling panelists that copyright protection covers the “expression of ideas,” but not methods of operation. He said the copyrights Oracle has exerted cover the “structure, sequence and organization” of software code.

Google has argued that APIs shouldn’t be subject to copyright protection because they’re more akin to tools and techniques that programmers use to build software.

Oracle has argued that copyright protections should apply because they’re more granular and targeted than trade-secret law or patents.

day11-closing-1609612

(Image courtesy of icanhascheezburger.com)

International Business Machines Corp. disclosed it will replace its Oracle/Siebel customer relationship management software with products made by SugarCRM, an eight-year-old San Francisco company backed by Draper Fisher Jurvetson and two other venture funds.

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Of the two, Jonathan Schwartz, Sun’s last CEO, spent the most time on the witness stand. Called by lawyers for Google, he bolstered Google’s argument that it was free to use parts of Java as it assembled its Android mobile operating system.

Scott McNealy, called by Oracle, said it was Sun’s practice to let other companies use Java, but only with a commercial license, the primary requirement of which was that the licensee ensure that Java remain compatible.

While numerous other phones from the likes of Nokia, Research In Motion and Motorola were compatible with Java applications, those on Android weren’t. Compatibility is one of the main points over which Oracle has been arguing with Google. Oracle contends that not only did Google violate its patents and copyrights, but it then went on to build its own incompatible version of Java, fracturing one of the oldest premises of Java’s existence: Write once, run anywhere.

Schwartz said he had hoped that Google would take out a commercial license, but in the end, he said, according to a report on CNet News, Sun opted “to grit our teeth” and support it as part of the Java community. He said that he opted not to sue Google over the issue.

Oracle also presented as evidence an email from Schwartz, describing Google as having taken Java “without attribution or contribution,” and then went on: “This is why I love scroogle,” referring to a now-defunct Web-search service that served up Google-like search results anonymously. See it below.

HP sued Oracle over what it says is an agreement to continue to create software that will run on HP systems running Intel’s Itanium chip, an agreement that HP argues was struck as part of the settlement that ended a suit stemming from former HP CEO Mark Hurd’s joining Oracle in 2010. Oracle, for its part, has argued that Intel plans to phase out the Itanium chip, a specialized server chip that never saw any real success in the marketplace, in order to focus more on its mainstream Xeon line of server chips and has only been producing them because HP has been paying it to do so.

The pair lobbed dueling filings at each other yesterday. In Oracle’s filing, which is the first of the pair embedded below, its lawyers accuse HP of trying to have the court write the contract it says it never agreed to in the first place: “HP has now been forced to admit that the fuzzy, feel-good language in the Reaffirmation Provision would fail as a porting contract on its own — unless the Court supplies numerous detailed terms inferred from the parties’ course of dealing.”

In the second of the two filings embedded below, HP makes the point that Hurd, once HP’s CEO and now Oracle’s co-president, had previously worked with Intel on Itanium-related matters. The key quote from the introduction:

“When asked point blank at his deposition whether it was misleading for HP not to publicly disclose the ICA [Itanium Collaboration Agreement], Oracle’s Co-President stated definitively: “No.” Thus, to prevail on its false advertising claims, Oracle must establish that its own Co-President was responsible for a fraudulent scheme while he was the CEO at HP, and that Mr. Hurd perjured himself at deposition. Although, and somewhat incredibly, Oracle recently stated on the record in response to this Court’s question that Mr. Hurd was part and parcel of this alleged scheme and pattern of lying, Oracle has no evidence to support this claim against Mr. Hurd. In any case, the fact that Oracle is even going down this path against its current Co-President reveals the absurdity of its entire claim.

Here, you can read them in the original, Oracle’s first:

Oracle Reply Msa 1599529

And now HP’s filing:

HP Reply in Support of Cross Claim MSJ

Andy Rubin, Google’s senior vice president of mobile, was shown during his testimony at a trial in San Francisco a series of emails he wrote about six years ago advising others at Google that the company should buy the right to use Sun Microsystems’ Java technology in Android.

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