IBM In Talks To Buy Sun

My, it's been a busy week in our industry, hasn't it?

Cisco UCS on Monday, IBM interested in acquiring Sun on Wednesday. 

I wonder what Friday will bring?

Much will be written about this -- as usual, I found Chris Mellor's take very insightful -- but I thought I'd offer up a bit of quick personal commentary.

First, The Obvious

We all knew at some point Sun would be acquired, split up or otherwise morphed.  Too much struggling for far too long.  Sad to watch, unfortunate for all involved, but somewhat inevitable.

The question was -- who?  The public hint was Jonathon S. talking repeatedly about "shareholder value" which probably means an exit strategy of some sort.

Many industry names came up in that discussion, including EMC's on occasion, but -- now that the news is out, it makes a certain logic.

The Big Pieces

Most people look to the large legacy Solaris base that needs to go somewhere.  I'm sure that's valuable to IBM.  The industries that Sun has enjoyed success (e.g. telco) are complementary to IBM's.  Access to new types of customers has a value as well.

So far, so good.

Chris points out that -- as a result of this acquisition -- the high-end tape market will collapse to one and only one vendor.  If that won't create an incentive to move off big tape, I don't know what will. 

Personally, I'm looking forward to hearing more from TonyP from IBM extolling the myriad virtues of tape.

The Hidden Gem?

When I heard about the proposed deal, the one thing that immediately popped up was Sun's enormous treasure trove of open source software.  Many of us would argue that there's enormous value (economic, strategic, competitive) in that stack -- if someone could just figure out how to monetize all of it.

Now, put all of that inside IBM, who one could argue *has* figured out how to monetize open source with services, support and other "solution completers".  zSolaris anyone?

One could argue that Sun had unique value to IBM -- and perhaps no one else in the industry -- on this basis alone.

The Storage Angle?

Frankly, I don't think there's one of note.  Sun did interesting stuff with storage, but never made any money at it.  IBM probably makes money on storage, but never does anything interesting with it.

I can't see two companies that haven't demonstrated any reasonable proficiency somehow becoming proficient anytime soon. 

Not to mention all the ugly product rationalization that happens when two broad product portfolios collide and have to be consolidated.  If anything, all of this is somewhat of an opportunity for the storage specialists such as EMC and others.

What Do You Think?

Does this deal make sense for IBM?  For Sun?  For customers?

What are the likely (and maybe unlikely) consequences of this if it comes to pass?

Never a dull moment in our industry ....

Comments

[Paul Stamp]

Thoughts of strapping two drunks together to make them walk in a straight line come to mind

[Chuck Hollis]

Ooooo, that's harsh. Funny, but harsh. Remind me never to get on your bad side, OK?

[jt]

When you have two big companies (from an installed customer base perspective) like IBM and Sun, it's never good for the customer. The ultimate goal here is to reduce the amount of competition, which reduces my ability to bid for widget X. It's serious hogwash when there's talk about synergies and any benefit to the customer.

The thing that I'm most interested in learning from this is how this will effect IBM's relationship with NetApp, when there's the looming Sun vs NetApp litigation issue. Maybe IBM should just gobble up NetApp while they're at it and make everyone sing Kumbaya.

[shanth]

Agreed, monetizing open source is a big win. But I have to disagree with your playing down the storage angle. When makers of interesting stuff meet those who know how to make money off the stuff (well put, btw), then I see opportunity.

[Charlie Dellacona]

Do you think it was a defensive play on the part of IBM?

If cisco had gotten hold of Sun, with Solaris and MySQL, and with their UCS direction they would have been able to offer a near toal solution from the top of the DB stack to the edge of SAN.

Not too mention they could have steered Java and its framework standards away from the needs of IBM.

The whole thing just seemed reactive to me.

[Dave Vellante]

Chuck...your analysis of this story is right on (and saved me a bunch of work with my wikibon blog-- thanks).
http://wikibon.org/blog/?p=349

Disagree with the comment jt that this is ALL bad for customers. Sun is not a long-term viable investment platform for CIO's-- too much uncertainty. Yes it reduces competition but there is serious over-supply in the IT industry and at some point struggling vendors can't adequately fund R&D-- that's not good.

Willing to keep an open mind on the storage angle but I think Hollis is right. zzzzzzzzzzzzzz.

[Adam Hartung]

IBM buying Sun is sooo last century. With Sun out of gas, who cares if IBM buys the company or it "winds down" like DEC. Doesn't IBM have something innovative to do with all that money - like Apple and Google have? Read more at http://www.ThePhoenixPrinciple.com

[soikki]

Hmmm... Remember a few years back, with EMC's share at $4, the rumours of IBM or Cisco buying EMC?

[David Vellante]

One more thought on this. We've seen a clear trend toward re-integration as a competitive structural model in the IT industry, especially in the data center. That re-integration will be actual (HP/EDS, IBM/Sun, etc.) and virtual (VMware/Cisco/others).

Either way, open source is an enabler, and I would argue a pre-requisite to that re-integration. Here's my longer spiel on this topic:
http://wikibon.org/blog/?p=386

[Jim]

Bearing in mind that the virtualization market is all x86-based, an x86-based operating system would be something handy for IBM to have available as a base to provide virtual appliances, a cloud computing framework, etc.

Oh, and a virtualization platform (VirtualBox) wouldn't be a massive burden for them, either.

[Chris Saunderson]

The Open Source portfolio that Sun has is interesting, but it's their non-open source assets that's likely the gold hidden in the attic. Sun's LDAP is second to none, they have an interesting set of patents that are very attractive, and then the MySQL Enterprise world.

There's an argument to be made that IBM could just wait for Sun to part itself out, but given the relative cheapness of Sun, it's unlikely to be wait-and-see.

[Brainy]

I'm not a fan of this IBM buys Sun thingy...

But with this deal IBM could build a real Unified Computing System.

Let's see

OS: z/OS, AIX, (Open)Solaris, Redhat Linux, MS-Windows
Virtualization: Sun xVM Server (Xen), LDOM, LPAR
Hardware: POWER, SPARC, Intel / AMD X86
Networking: Sun's coming OpenNetwork Appliances
Storage: Sun's OpenStorage Appliances, IBM DS for High-End
Middleware: A whole bunch of Software
Databases: MySQL, DB2
VDI: Sun Ray

No-one else will be able to build a unified computing system with such a broad range of products supported (forget Cisco).

[the storage anarchist]

But IBM already HAS a unified computing system...in fact, have had for over 35 years.

Today we call it the z10.

And I'm not sure why you'd think IBM could suddenly "unify" more stuff, when they still haven't unified all the stuff they already have...

Long live the mainframe!

[GK]

Brainy:

You forgot IBM's other child in your list; the good ole AS/400, though today it's called Power System i and the OS is called IBM i. It runs IBM i, aka OS/400, i5/OS, AIX, Linux, Windows (therefore VMware)... all on the same footprint, and managed by the same storage manager. It also supports LAMP: Linux, Apache, MySQL, PHP.

IBM is gearing up to do battle with HP and the Cisco/VMware/EMC partnership. There was news last week of mainframes supporting Windows. It will be interesting to see where this goes.

Funny thing though, that folks who've been in the business for 25+ years have seen the contraction and expansion of the computing paradigm. Mainframes were the norm back then and now that concept, of placing your computing power in large boxes, is coming back.

Gosh, it's great to be in IT today.

[as400 person]

Now that Oracle got the sun golden egg, its amazing to hear Oracle talking about them being able to use Solaris and OracleDB to provide an OS with a tightly integrated db.

Hey, we have had a system that has done this for 20 years, its called an as400!