IBM Wants to Buy Sun? Why?

Boy, I wrote the last Sun piece with a recommendation for Sun to hold on to its OpenSource business, and divest the hardware business, and thought that Cisco may be interested in the DataCenter business in particular.

And the news this morning is that IBM is considering buying Sun for about $7 billion.

Well, if Sun can get that offer, good for them, and they should sell. I just feel a little uneasy about IBM acquiring ALL of Sun, not for Sun’s sake, but for IBM’s. Sun’s P&L is not a pretty picture. IBM’s is a dream.

Why does IBM want to saddle itself with Sun? Acquiring additional server market share? Java? OpenSource? Some shady networking technology to compete with Cisco? That makes no sense. There are far better acquisition targets in networking than Sun. Blocking Cisco from acquiring its way into Data Centers? May be. Preventing Java from landing in the hands of Cisco? May be.

In these days of trillions and billions in bail-outs and welfare, it looks like someone is willing to bail Sun out with $7 billion. I am just perplexed to see that entity is IBM, not Obama.

The only explanation seems to be that IBM wants to block Cisco.

Comments

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Server Wednesday, March 18, 2009 at 10:00 AM PT

Hi Sramana,

I have something against the last line of the second last paragraph.

Java is into the open source now, a decision Sun took couple of years back. So there cant be an issue like Java falling into Cisco’s hands…

At the same time, What Sun and IBM did was build their own IDEs for development on Java…

Sun called it Netbeans and IBM called it Eclipse…
If anything there would be a fight/tussle between which of these product lines would be choked…

My personal feeling is that a valuation of 6.5 bn is a good bargain for Sun Microsystems…however the point is I fear in the days to come the negotiations would tip the price much higher than that. At this point we dont even know the nature of the deal(all cash, stock mix etc)…

Thanks,
Sathya

Sathya Wednesday, March 18, 2009 at 1:33 PM PT

WHY is not the only question but also WHO will end up with WHAT? Physics in business will prevail and with action there will be reaction. IBM, HP and Cisco are my bets on the companies which will radically change the landscape at other companies expense. The Elephants are now dancing even if out of sight. The music just started ….

Ron Mabry Wednesday, March 18, 2009 at 3:20 PM PT

This may be a rumor balloon. It doesn’t make a lot of sense. The reasons are explained in my blog post here at:

http://subbaiyer.wordpress.com/2009/03/19/does-ibm-need-sun/

Subbaraman Iyer Thursday, March 19, 2009 at 7:16 AM PT

Good post. I pointed to five great (often overlooked) products that IBM would get by buying Sun http://tiny.cc/oo5mO

Eric Thursday, March 19, 2009 at 12:06 PM PT

With the recent layoffs, I don’t know if Sun has enough direct sales people to go it alone over the long term.

Beach4me99 Monday, April 6, 2009 at 3:46 AM PT