Why the heck does IBM want Sun?
By Ian GRAYSON
A recent report in the Wall Street Journal has sparked much head scratching in the world of corporate IT.
According to the report, IBM is busy running the slide rule over Sun ahead of acquiring the software and hardware vendor.
But why would Big Blue have any interest in buying a company that has been in the doledrums for years and whose share price has wilted?
The answer is probably customers. Despite its recent performance, Sun has some lucrative contracts with companies in the big end of town, providing the high-end hardware and software that powers big data centres. A purchase would allow IBM to add this revenue stream to its already impressive balance sheet.
But apart from that, it doesn’t seem like such a great fit. For years IBM has been moving away from a reliance on hardware, to focus on the much more lucrative areas of software and services. Sun’s server business would therefore not seem particularly appealing.
Then there’s the software. Sure, Sun has things such as its Solaris operating system and Java, but how much cash can IBM wring from them? Sun has already started making much of its portfolio open source, further reducing its book value for an acquirer.
But perhaps IBM is thinking “Why the heck not?”. With relentless consolidation in the IT sector showing little sign of slowing, if it doesn’t buy Sun then someone else will.
If the price is right, IBM might just think it’s worth opening its cheque book to further shore up its already large presence in high-end computing and keep another competitor out.
Whether the regulators would let such a deal proceed remains to be seen but, if it does, expect to see a lot more redundancy notices being handed out at Sun offices around the world.
 Subscribe to Hydrapinion
|
Recent Posts
1 comment
Let's not forget the flow-on effects from open-source and this is hard to quantify through a market/book/etc. value.
The various BSD and Linux distributions have shown open-source communities do provide worthwhile solutions and these communities are an important instrument for progress/innovation; --> $$$
Sun has had a long history of open source (as well as proprietary)
software and have links to many open source communities/projects. Sun opened Solaris, has IBM opened AIX ? OpenSolaris has many interesting technologies that Linux/etc. can only dream of or are trying to implement their own version. In a way, due to different licensing models, etc., OpenSolaris might be a threat to Linux (threat to IBM's investment in Linux ?).
e.g.
[1]
My friend left Microsoft Windows, due to security concerns, and has been using Linux (Zenwalk) for about a year. He's been happy with Linux.
Recently, after sampling OpenSolaris 2008.11 for about a week, he uses OpenSolaris as his 2nd Unix OS and envisages one day soon to drop Linux.
The point is, OpenSolaris was able to sway a relatively new Linux user who had no bias (i.e. not a Linux-only mentality).
[2]
Sun has reached an agreement with Toshiba to pre-install the OpenSolaris operating system on Toshiba laptops.
http://www.zdnet.com.au/news/hardware/soa/OpenSolaris-now-on-Toshiba-laptops-/0,130061702,339293785,00.htm
[3]
HP and Sun Microsystems Sign Multi-year Partnership Agreement for Solaris on HP ProLiant Servers
http://www.sun.com/aboutsun/pr/2009-02/sunflash.20090225.1.xml
If IBM believes in tapping into the power of open-source then it should (or may already) view Sun as a player (ideological or technical) in this market.
Comment feed for this post
Ian Grayson has been a technology journalist for more than 15 years. A former IT editor of The Australian newspaper, he now runs his own freelance business, crafting stories for a range of publications and web sites. He is intrigued by the power that technology wields in the world of work - both for better and for worse - and in this blog offers insights into what it all might mean.
