Oracle and SAP put the squeeze on customers

Several years ago, Oracle's (NASDAQ: ORCL) CEO, Larry Ellison, was clear about his vision: the enterprise software market was in desperate need of consolidation.

It was actually controversial. But, in the end, it was prescient.

Basically, he has struck a variety of small and large M&A deals -- making Oracle a tough competitor for rival SAP (NYSE: SAP).

True, Ellison will say that consolidation is good for customers; that is, it allows for more efficiency (hey, it's easier to deal with a single vendor, right)?

Although, Ellison can be crafty. No doubt, he has a big-time agenda: lowering competitive forces. For example, last month Oracle raised prices on its software offerings.

Something else: SAP has raised prices on its maintenance contracts (this is according to a recent piece in the Wall Street Journal, which is a paid publication).

All in all, such things are smart. In other words, what choice do customers really have? If you have made huge investments in a platform, it's extremely tough to make a switch (especially for mission-critical software).

However, for investors, this is something to note. The price increases should be highly profitable -- because of the high margins.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.