IBM, the biggest monopoly holder in the technology business, half of who's revenue comes straight from their competition free Mainframe business, is interested in buying Sun Microsystems.
A company who's mantra since the dot com crash has been about disrupting the status quo of company's such as IBM. Insert culture car crash here.
Before I begin I have my suspicions about the timing of the WSJ leak. Those usually happen when the acquisition target is looking to fan the flames of a bidding war when another less interested party has come sniffing around.
I already think it's overpriced at the reported $6.5B and I'd guess that price will be higher by the time they close.
The question is what would Sun bring to IBM's table?
The key assets I'd see for IBM in a Sun acquisition are:
-The largest piece of the shrinking tape pie.
This would turn the tape market into a two player game. Quantum on one side IBM/STK on the other. Tape is incredibly important to IBM, even used as primary storage by it's Mainframe customers, but as a technology while it has a present tape does not have a future.
It won't die as a technology until five seconds after the Mainframe does but it's an innovation dead end.
-Control of Java.
Something which does a couple of hundred million in revenue annually. For all their talk about opening Java we'll see how that shoe fits when it's an IBM asset.
-A hammer lock on the server business.
Combined IBM/Sun server share exceeds 40% and Sun's server business is their fastest growing and probably most interesting division.
-Control of MySQL
The Oracle/DB2 war still rages so MySQL could be an interesting IBM attack point in that fight to that fight.
-The switch family
Cisco has parked their tanks on the server makers lawn. Sun have been making rumblings about going after the high margin switch business with commodity components. HP has ProCurve, IBM has...?
Post Sun acquisition they'd have the upcoming Constellation family of switches.
-It's all about EDS
HP's aquisition of EDS puts IBM on the back foot. A reversal here would be to go around EDS entirely, one way of doing that is to leverage the fact that many large EDS run shops are Sun customers. Buy Sun, put yourself into that relationship with the customer and HP have a hard time locking you out.
The key liabilities I'd see in such an acquisition are:
-Solaris
IBM's cash rich pSeries division is an AIX stronghold with IBM's numerous attempts to kill AIX and replace it with Linux having all failed. With Linux being pushed hard on xSeries hardware, on the Mainframe and even on pSeries where does Solaris settle?
The answer is that it doesn't.
This would be Tru64 meets HP-UX all over again with noises made about integration but eventually the acquired UNIX going away. There will be massive uproar for the fanatical Solaris admin base (Of which I was a member) and as a sop to them eventually some crusty code would probably be thrown over the wall without Sun's community source strings.
-Sun Storage
Sun's server division had ambitions to chase the storage Dollar. Would an injection of Sun DNA into IBM awaken the same imperative in IBM's xSeries division? If it did that would be bad news for IBM storage partners.
On the other hand we can see the NetApp/Sun suit settling within moments of the ink drying. I don't see IBM copping to any liability or paying NetApp any money. They might even have a patent cross licensing agreement in place.
That doesn't change the fact the Sun guys will still despise NetApp with the burning fury of a thousand stars.
I also don't worry about ZFS going away, maybe the AIX team might want it maybe they'd see it as too much effort to decouple it from Solaris but regardless it was always going to be worm food in the face of btrfs. Sun legal could never get to a place where widespread adoption was going to be easy.
Sun's storage division for all the hype is a blip in overall Sun revenues but it wouldn't be if IBM decided they now had the technology to do it better than anyone they were rebranding gear from.
As for SPARC, hand it over to Fujitsu. They built faster SPARC processors with better yields than Sun ever did and with POWER in their pocket I can't see IBM being interested in anything besides the SPARC IP.
Sun have a lot of talented people and EMC is hiring. If the whole IBM thing doesn't work out, come and see us.
I'll be back later with more on this, today is a busy busy work day.
