Sun: Now What?
I was never happy about the prospect of the IBM-Sun merger, and am glad to see that the deal has fallen through. But the question now looms even larger: what happens to Sun next?
I had said earlier, on the day the deal rumor was leaked, in fact, that Sun should hold on to its OpenSource business, and divest the hardware business, and thought that Cisco may be interested in buying the DataCenter business in particular. I am pretty much going back to that recommendation for Sun.
I have a different concern at this point though, based on a discussion we’re having on my blog on value creation versus value destruction: “One of the problems that we have with Wall Street compensation is that traders make money both as the market goes up and as the market goes down. I have been thinking about the short-selling issue for a while, and have pretty much come to the conclusion that short-selling needs to be banned. No one should be making money if a company’s stock is going down. And especially, no one should have the incentive or the tools to bring a company’s stock price down.”
If you read this discussion and the multiple points of views it has been capturing, a top of mind concern would be that short sellers would now completely tank Sun. It doesn’t take a rocket scientist to see that Sun is in trouble. Deep trouble. Normal investors, under the circumstances, would make logical decisions based on that knowledge. Why do we need the short-sellers to descend on the stock now, in addition to the natural buy-sell behavior that is inevitable?
I would like to hear the various points of view out there on the topic of banning short-selling – both in favor and against. Please comment here.
This segment is a part in the series : Sun
. Promise of Red-Shift, Risk of Virtualization . Now What?
Well, Sun will be one of the walking dead companies. It has failed to find the right business model for open source. the failure of the deal will hurt Sun more. Customers would be wary of buying Sun gear.
I have blogged on the implications of the failure here at:
http://subbaiyer.wordpress.com/2009/04/06/ibm-sun-deal-fails/
IMHO, anything that brings liquidity and fluidity to the market benefits all investors (whether S/T or L/T), simply because it makes market more efficient and more transparent. Among those tools would be plain derivatives, short selling, margin buying.
I beg to differ. The “opensource way” has led Sun into needing this deal to survive. The world doesn’t need another Dell or HP like server manufacturer selling intel + linux trash.
For those that have never used Sun hardware, I would compare them as the Apple version of enterprise server and operationg system. Solaris has features that no Unix-like OS has in the market. Sun servers are carefully designed and its Sparc processores outpace the rest of the market in the multi-core multi-thread realm.
Sun doesn’t need opensource to survive, it has something much more powerfull and has pioneering ever since its creation : Open standards.
The StorageTek purchase seems like it was a good deal. The MySQL deal is something I’m still trying to figure out, reminds me sort of the Cobalt deal…
Do you work for Sun’s hardware division? Seems like a highly biased perspective to me.
I have used Solaris. I think Sun is fighting a losing battle on Solaris and SPARC. The difference between VISTA and MAC is very significant. I don’t think the same holds with Solaris and SPARC.
Sun doesn’t need OpenSource to survive. It needs a strategy to survive. Commerical OpenSource has market momentum, and it could be one strategy that Sun aligns itself around.
Today, Sun has no strategy per se. It is is several different businesses, and a market leader in none of them.
That’s the kind of company that dies.