NEW YORK (Business 2.0) - Three months ago I wrote, "There's one heck of a sale going on for retail software." Oracle's purchase this week of ProfitLogic shows there's no sign that the sale will stop anytime soon.

The fundamental driver, of course, is retailers' increased spending on technical infrastructure. Past waves of automation in the sector have focused on the warehouse and the checkout counter.

Now retailers are turning their eyes to merchandising and marketing, where decisions about what to buy and how much to stock have for too long been based on gut instinct, not hard numbers. (ProfitLogic's software helps companies decide when and how much to mark down slow-moving goods, a tricky matter that's critical to keeping profits up.)

But there's more to Oracle's (Research) move than just latching onto a hot trend. A little over a year ago, ProfitLogic announced an expanded partnership with IBM (IBM), agreeing to make its software work in concert with IBM's DB2 database, WebSphere integration software, and other middleware, as well as IBM's server hardware.

It was a smart move for the small company: IBM has long enjoyed a tight relationship with many retailers, dating back as far as the 1910s, when a predecessor company made meat slicers and scales for grocers. Since the 1970s, IBM's computerized cash registers have made the company a near-ubiquitous presence in the retail world.

Thanks to the merits of its software as well as its IBM partnership, ProfitLogic has assembled a customer list that includes the likes of AnnTaylor, Bloomingdale's, Gap (Research), and JCPenney (Research).

Oracle, of course, would love to get its hands on that roster. For now, it's treading lightly; both companies have said Oracle will keep IBM as a ProfitLogic partner.

"We're not going to force any changes," says ProfitLogic spokeswoman Jakki Glivicky.

But don't count on that to last for long. As ProfitLogic president Scott Friend and Oracle executive Duncan Angove put it in an open letter to ProfitLogic customers, "We plan to provide a tightly integrated retail enterprise solution."

Translation: Oracle plans to sell them Oracle databases, Oracle business applications, Oracle integration software, and Oracle consulting services. Count on Oracle's salespeople to turn up the heat over time, starting with a soft sell of easier integration with other Oracle products and then turning to a hard sell of better pricing and data security to customers who embrace an all-Oracle software stack.

Once again, Oracle's aggressive mergers-and-acquisitions team has poked a hole in IBM's software strategy, which is to partner with the makers of business-specific applications rather than to buy them.

Several years ago IBM software chief Steve Mills got rid of the company's business apps, focusing instead on middleware. JD Edwards, PeopleSoft, and Retek had embraced IBM's middleware -- until Oracle bought those companies too.

Oracle is taking pains not to be heavy-handed with existing customers who use IBM -- Big Blue is cosponsoring a meeting of JD Edwards resellers this week -- but it's hard to imagine IBM's role with Oracle customers growing over time.

In any event, it's a good time to be a small company in the enterprise-software business. Either you get a buyout offer from Microsoft (Research), Oracle, or SAP, or IBM courts you with lavish technical and marketing support.

The potential downside, of course, is that one of the giants buys a competitor, and you find yourself competing with a sales force that numbers in the thousands. As ProfitLogic's customers know, sometimes you're better off putting your wares on sale early.

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