Sun and IBM - What price Bigger Indigo? Innovation loves a crisis, Sun boss Jonathan Schwartz likes to say. But perhaps not so much as your competitors love your particular crisis. Witness the way IBM has quietly but gleefully watched Sun's power and fortunes wane in the aftermath of the dot.com bust. Every one of those wisecracks by Scott McNealy and Ed Zander a …
That's too cheap. For some billions Sun could buy all their own stock, they have a warchest of 2, 3 or 4 billion, no?
6 billion would buy what? The JAVA brand maybe... And I'm talking only about the brand, no IP, no patents, no talent.
Sun is one of the few that *invent* and inovate. Must big players only do inovation (like Microsoft, Dell, etc). Why would the planet Earth want to join two of the few (big) inventors? It can't happen!
I think Sun will be a success. They are (becoming) very consumer friendly. Once Sun's old atitude is forgotten, they'll have way more recognition than must of it's competitors.
I think this whole "news" is some ploy to try stopping Sun from becoming the must successful vendor to FORTUNE 1000 companies. Sun's "new" business model will win any other vendor's offer. Think about it: Sun is saying "take all our tech for free and *if you want to* you can buy the hardware from us and services too". After a few big deals the consumer will feel that old-school "buy from me because you have to" is not in their best interest. Forget about Open Source, think "Open Platforms and Open Standards".
I just hope that Sun makes it for a few more years (they have cash and other players are loosing more than them), time enough to plant the seed and let people realise that this is the correct way to do business. Sooner or later it will happen, I just hope it's soon.
The article seems to be hard pressed to find any Sun assets that are a good fit for IBM, so is this simply an $8.5bn assassination of their only remaining competitor (and a swift return for S.E. Asset Management)?
Perhaps the execs also see the current economic state as an opportunity to sneak one past the regulators.
IBM have long said that they want their P-series to do everything. They can already run x86 apps on this power platform, and I would expect that running Solais apps with a bit more work from Transitive will make this a reality. Then you have one system that can run 3+ different operating systems, can virtualise in 3+ ways, add in the extra storage and networking magic from Sun and you have competition for Cisco's new offering.
I think the purchase is a done deal, it makes too much sense for the future of IBM not to do it.
If SUN goes we all loose, and this news out in the open now will only harm SUN even more. Would you buy SUN if you thought IBM was going to swallow them, better buy Power and save the hassle of conversion later.
At the moment the only real beneficiaries of this news are IBM and SUN's shareholders who want to offload their shares at a reasonable premium.
It would meake more sense for SUN to buy themselves. a $3 billion research budget cut by IBM probably means a real purchase price of $5 billion, so not much of a premium on the stock price when the news leaked.
I'm going to have a hell of a job now convincing a client to switch from IBM/Dell to SUN. And I can see a couple of deals we've recently done, but not yet bought the hardware being under pressure to switch to IBM, who want's to start with new kit that's already obsolete.
Are we sure this is not just IBM spreading FUD to depress SUN even further, a bad quarter would depress the price perhaps to $5 billion and then what a bargain.
But I still think ultimately we will all loose if SUN is merged with IBM, ultimately competition will be lessened and innovation reduced.
A sad day if this happens, which is rather likely given the money-grabbing Wall St practice.
We like Sun as they really do invent and develop stuff with a long term view, unlike Dell and (recently) HP. Also our recent tender for a storage system showed the new 'Amber Road' stuff from Sun was much better value than any of the other players, and we very much doubt that an IBM-owned Sun would have offered the kit at such a competitive price and without the lock-in that all of the other vendors had.
Ever costed a 1TB disk for EMC, IBM, HP, etc? Think x10 over the basic cost!
And they won't work with an ordinary disk, while Sun allows you to use a el-chepo disk if you must, but thier own 'enterprise' disk is only x3 or so of the typical cost.
IBM regularly tops the world's companies in number of patents filed, per year. That's what makes it so hard to genuinely compete against them: you drive money into IBM, even when you sell against them, because you have to use IBM-patented technolgies in order to produce competetive products.
I suspect the one asset, in Sun's portfolio, that IBM really covets, is ZFS. Because ZFS is open sourced, IBM could never 'own' it, but by pushing ZFS as a defacto standard on their own hardware range, IBM could radiaclly alter the storage market (for the better, in many ways, it must be said).
Indeed, I think ZFS, alone, could explain a lot of IBM's interest in Sun: it's a very IBM-like invention, and one which they would be very keen to extend, since Sun hasn't capitalised on it. Surely, the fact that the current build of Mas OS server (a niche market so small, that it feels cramped, even with only one occupant), is about the most advanced non-Sun example of a fully supported read/write ZFS, is evidence enough of the way that Sun's management haven't properly utilised the tools their own resarchers have given them?
The Blindfold is strong with this one! I haven't seen so much paranoid Sunshine since... well, one of Novatose's comments. "It's all a big and mean conspiracy to stop Sun ruling the World with open source!" Did you just sleep through the last decade? Sun is dying exactly becuase it can't make enough money out of the current business strategies.
Sun's "open source" strategy has always been a sham, aimed at trying to stop Linux from eating it up. It failed - Red Hat and SuSE in particular have feasted on the Slowairs installed base, switching mainly edge servers from expensive and slow SPARC to x86 from hp, IBM, Dell, FSC, Uncle Tom Cobbley and just about everyone EXCEPT Sun. Why on Earth do you think Sun backtracked so hard on Linux and finally bought the Galaxy x86 server range? Because the writing was on the wall, it was just Sun took ten+ years longer to read it than hp, IBM, Dell, FSC, or even Uncle Tom Cobbley.
Whilst IBM may buy Sun and keep Slowaris going for the meantime, the Transitive purchase shows it would only be to get SPARC customers off old Sun kit onto Power and xSeries gear. "Hey, Mr ex-Sun Customer, would you like to port right off that old Sun junk onto a nice, shiny Power box LDOM, and you don't even have to recompile?" I can't see a single reason why IBM would keep any of the current or planned or vapourware SPARC CPUs going when they have the vastly superior Cell and Power designs and Intel's Xeon. At best, they might keep the Niagara designs for networking switches, but as server designs? Nope, not a chance. I can see IBM looking at porting some Slowaris features into AIX, but I can't see them wasting too much time on it. The AIX brand is far too strong inside IBM for them to stomach the idea of continuing Slowaris as anything other than an open Linux clone.
The patent portfolio is a nice little piggybank, and I expect IBM to do a much better job of monetising it than Sun ever did - IBM seem to be able to make money out of patents without alienating the World in general, whereas Sun's efforts have been laughable. Expect a quick settlement of the NetApp case, probably a simple patent cross-licensing deal. IBM has no reason to aggravate NetApp any further, in fact they have every reason to cross-license and co-operate with NetApp in building NAS and SAN devices to compete with EMC, HDS and hp. Seeing as the majority of Sun's storage products are nothing more than badge-engineering or glorified NAS systems, there is more in it for IBM to stay pally with NetApp.
Time for the Sunshiners to face facts - the UNIX wars aren't quite over, but Slowaris is confirmed as the loser, and Sun is virtually out of the game.
I agree with your points TPM, I think consolidation of vendors is going to be painful as we do lose the diversity that sometimes creates new / stronger technologies.
I concur that we could see Solaris running on Power. Heck, I'm still waiting for z/OS on power.
Maybe they'd just buy Sun to stop someone else (i.e HP) from buying Sun. Not that HP with the EDS issues at the moment are in a strong position to adopt Sun.
One of the few benefits to IBM in the article was an ability to increase it's networking expertise. This would be a bit of a surprise change at this time since they onlt just flogged off their networking people to AT&T last year.
I don't know how smoothly or otherwise the new networking marriage has been going elsewhere than the UK but if IBM tries to build more network expertise than needed to properly engage with an outsourcing supplier then I'm betting it'll lead to friction.
AC because my TUPE from IBM -> AT&T happened last year and this could lead to interesting divorce proceedings.
Are you even a reporter? The number I have consistently read that IBM is rumored to be offering is $6.3B, not $8B. And this most assuredly would not be IBM's largest acquisition. Far from it. And, given Sun's install base and potential for future growth (with a management team that knows what it's is doing), even $8B is a bargain basement price for Sun. Sun has been controlling debt, seeking and getting capital influx, restructuring costs and realigning priorities for over a year now, in preparation for a deal like this. They are in pretty good shape to be acquired. I doubt IBM has any interest in acquiring Sun has much to do with operating the company as a subsidiary. There is very little reason to do so anymore. Rather, they get all of Sun's patents, a lot of customers, and Java. Various units at Sun will probably be shut down or sold off -- i.e., the Sparc business to Fujitsu.
IBM would kill Sun's culture, which is a write off of the entire investment.
The best use of Sun's tech would be to make a phone/netbook hybrid that was a touch screen that used bluetooth for keyboard, mouse, headset as needed. It would be an Enterprise Access Device that plugged into your network, but had sufficient power and storage to work on your documents disconnected.
But the company that could make the best use of this kind of device, the company with the cash to throw around, the company with the culture match to Sun, isn't IBM.
It's Google.
The systems editor of The Register might want to see a burgeoning of IT vendors, and presumably architectures, but to the average company running IT systems, they are profoundly fed up with technical incompatibilities. All those qualification matrices of application software, operating systems, I/O stacks, multifarious patches and so on. What companies want now is standardised architectures and a choice of vendors providing different service levels and costs. It's inevitable - not only can't all those system vendors afford all the R&D and support, neither can their customers.
Of course this is all has a downside. Firstly it could stultify innovation (but then much of what goes for innovation is just and old concept given a new name), and limited genetic variation might make the whole thing vulnerable to systemic failures, such as security (witness what the Windows mono-culture encourages). We might just be seeing the maturing of the IT market signaled by the last stage of consolidation when Intel's x64 architecture does, eventually, take over (almost) all the world. It's difficult to see how Itanium will limp on another 10 years, if IBM get there hands on SPARC then that architecture will die (and I can't see Fujitsu being able to fund it on their own when they don't even own the operating system). So for mainstream IT that will leave x64, Power (assuming IBM can keep that going) and not much else. If the next generation of x64 tackles the inherent scalability issues (and with socket compatibility with the next Itanium it will go a long way) then we could be very much in the end game.
The main thread I'm hearing here and elsewhere is sparc is dead.
So where does that leave us?!
x86/x64, Power (6 and freescale), itaniam, & 390?
Considering IBM is the only one making 390 iron,
Itaniam has been declared on it's way out by some,
Mips? SGI?
Comon Guys, buy Sun kit!
Help and save my job!
I would stick to commenting on hardware, TPM.
"If there is one thing that IBM has shown no propensity to do, it is to open source its own software"
Really? Eclipse? Cloudscape/Derby? Geronimo? Nothing to do with IBM, is that what you're saying?
Back in the real world, OSS is pretty much at the heart of IBM's software strategy. Most of its software lines have an OSS version at the bottom end, with an easy upgrade path to the mega-bucks versions once you've got them hooked. IBM is way better at this than Sun has ever been.
We are a large institution with lots, lots of servers.
Some years back we looked a lot at Linux as a migration strategy from Solaris. We did so because we wanted the benefits of Linux:
1) Runs on commodity hardware
2) Open source
3) Free
4) Performanant
And what happened? Sun literally took away all of the above reasons for us to look away from Solaris and look to Linux. We never made the transition and haven't regretted. For a big corporation like ours Solaris is arguable a stronger server OS than Linux. It is just a lot stronger in all the disciplines that really matter to large shops. Not that Linux is bad in any way. Absolutely love it for my laptop. Solaris is really lousy as a desktop OS compared to Linux.
Sun also started to open source their software stack. Suddenly we could get things like a real MS Office alternative or a industry-grade Application Server (full stack) as F/OSS. In addition they advanced their innovation in areas that really matter to shops like ours: CMT, DTrace, Solaris zones, ZFS, etc.
Area by area they opened up, including hardware, so that customers would have a true choice. Lock by lock removed. "We want you to choose us not because you are locked into our proprietary software/hardware, but because we have the best solution". Compete on solutions, not on lock-ins. Give the customer an exit if he wants. Set him free. What a daring strategy !
Culture-wise most (if not all Sun employees) began blogging. Honest blogs. Enthustiastic blogs. Blogs passionate about technology and solving real-world problems rather than marketing. Blogs that admitted to errors.
Yes, we have spent a large sum with Sun over the past years (also very recently) but we wouldn't really have a major problem if they folded. Why? Because they have provided us with choice and openness. This is unique. !!
Yes, I'm biased. I must admit I've bought the whole story they are trying to sell me.
All of this will go with the IBM take-over. IBM is the anti-thesis of the above.
Too bad the world was not ready for Sun's strategy.
Redhat, HP and Fujitsu (and SGI even) must be rubbing their hands with glee, most of the big IT consumers (banks etc.) run an indeminty policy to ensure that their systems are supported by two vendors (a just in case policy). With Sun and IBM merging that comprimises a lot of IT shops. So the growth IBM could hope to see from this acquasition is somewhat muted as these guys will look to the remaining suppliers for their fullfil their vendor redundancy policy.
Carefull out their........
You missed the point.
Sun is changing. And the new Sun will attract lots of big clients.
Regarding the general wellbeeing of IT, I just think that killing one of the few guys that invents (not just inovating, inventing) will be very bad. Think the obvious ZFS, DTRACE, JAVA and friends, etc, and the virtualized networking gear, the thumpers (storage), etc, etc, etc.
I think it's a shame to loose that kind of company. And talking about what I think, I think this is just a rumor. Sun has several billion in cash (3 or 4 billion?). If the 6 billion offer is true, subtract the 3 billion, cut some jobs, cut R&D, and you just bought a $50 billion company for... Nothing! I just don't belive it.
Sun chips seem to be better servers and internet connected hardware then others. Maybe IBM can take some of the hardware components and implement it in a server power pc , separate from say a desktop power pc , and more usable , upgradeable , and programmable then the itaniam . Some less business suited representatives would be nice also ! Then of course the R&D of Sun might have a few gems. And the patents, oh lordy the potential . ALL this at fair price , which they will write off some how...
Now the software. Each have strengths in over all management of system"S hardware and software . This more advanced big system software would be customized for the new hardware coming out.
This could even threaten software company s who have hodgepodge [big ?]system software on multiple small system hardware, and put them back onto the desktop [if they can get them running smoothly] !
Sun has a very good culture and talented resources. Hope is a good thing and may be the best of things. Have the top execs lost hope in themselves. Giving way for this acquisition would be a loser's choice. I think Sun can stage a good come back and give a fight. SUN has got everything appropriate (Culture, Talent pool etc) except Good leaders who can make right decisions. yes, It is difficult but leaders have to learn as they fail and prove by fighting back not to give up. This is not the time to give up is my personal opinion.
"VirtualBox, a real diamond"
Nope. IBM's virtualization expertese is vastly superior to anyone else's. IBM's people would eat the VirtualBox people for breakfast. That IBM doesn't have an x86/SPARC/whatever virtualization product is mainly due to the internal thoughts of IBM wherein that sort of thing has always been deemed to be not strategic/not in the company's best interests/not our business etc. Believe me, a bunch of us have been round this wheel a number of times.
Further, whilst VirtualBox may be a good product (I don't know, I haven't used it), I have heard the ex-CEO speak about it in a technical presentation and he made all the mistakes that the other low-end virtualization people make (mostly presuppositions about memory use). People who use IBM's z/VM system know just how good that system is and just how immature the low-end virtualization products are.
IBM leadership showed lack of vision several time, remember the IBM PC? IBM virtualization expertise superior? Have you ever heard about VMWARE? All it matters in this world is market share not expertise.
X86 architecture is a ugly architecture, but nobody can beat it on price performance because of the volumes it get produced. Power, Itanium and SPARC will eventually be replaced by X86.
The most famous migration Transitive did was when Apple migrated from to slow and overheating Power CPUs to fast Intel CPUs.
IBM will do whatever it brings them more money, will see what that is...
"Crikey Matt, u can't even spel...." I'd like to think (out of charity) that you simply forgot to put "(sic)" at the end of that line, but then I do doubt any of your Sunshiners have the wit for such a joke.
"....I hope you have a job, 'cos u sure as hell don't care about anyone elses" Punctuation obviously also isn't strong in Sunshiner Land. But, to answer your question, I do have quite a good job, thanks. It could be better, but then I'm sure anyone could say the same. I didn't see any of you guys crying when the like of DEC or Compaq got swallowed up. Strange how you Sunshiners wished the direst fate on anyone that got in your way, such as NetApp, Microsoft or Red Hat, yet now expect us to shed tears for you.
By the self-pitying tone of your comment, I'm assuming you bet heavily on Sun, and now face the prospect of some hard times. Been there, done that, and so I'd quite happily throw you Sunshiners under the bus with Obama-like speed if it means my team and friends avoid a similar fate. Sorry, but it's still a dog-eat-dog World, you'd best find another pack to run with. Those of you with real ability will do fine, there will be opportunities with other companies, maybe even the ones you work for now, but those of you without the ability to adapt will probably end up teaching. I still have three ex-Sunshiners in my team, they stayed because they accepted the challenge of moving on to new technologies.
You have time, make a choice - either cross-train onto something else like Linux, hp-ux, AIX or even Windows; or take a chance on Slowaris surviving the Big Blue Wave and start carving a niche for yourselves. At worst I'd say you have probably three more years before the SPARC Slowaris stuff is really gone for good, maybe as many as ten years. If you have the option to retire before then you don't have to worry. If you need to go a bit longer then I'd suggest you get on with the training. Believe it or not, I actually wish you all luck. Just as long as you don't go work for one of our competitors.....
"IBM virtualization expertise superior? Have you ever heard about VMWARE?"
Yes it is and yes I have. Trust me, I've been doing virtualization for more than nigh on 30 years and the only reason there isn't something IBM knocking around on the x86 stuff is, as you rightly say, a lack of vision. That a bunch of us have regularly tried to get IBM management to listen to us over the last 20+ years and invariably gotten the same answer back from IBM management doesn't mean that the techies there are thick - trust me, they're not.
Ehh..
Here is why you can't download AIX...
Who was the first to finance SCO's rampage against AIX/Linux ? SUN.
So don't use the fact that you cannot download a OpenAIX version as an argument
that IBM is against opening up UNIX, and SUN for it.
Cause it was SUN who paid SCO to block any opening up of AIX.
But if IBM buys SUN that might be the ting that saves OpenSolaris, rather than killing it
off. Why ? Cause SUN bought the right to open up Solaris from SCO, and you know what ?
SCO did not own that right, so OpenSolaris lives on the grace of Novel.
// Jesper
"I didn't see any of you guys crying when the like of DEC or Compaq got swallowed up"
Then you weren't paying attention. Sun folks looked at those deals as huge wrongs on the IT world. It was, and still is, a common refrain that HP killed one of the best CPU's to come out (ALPHA). HP has outsourced most of their IP and by them buying companies that actually created technology instead of buying/renting it was widely chastised (especially by Sun people).
At least if IBM buys Sun they will keep the better stuff and add to it. HP on the other hand would put it in a closet and let it die or sell it to another company and rent it back.
(Matt, please don't bring up printers in this context. No one thinks that HP's "advances" in printing have added anything to the IT world in general)
Ooh, look! It's an old and burnt pot pretending to be white as snow!
"...Sun folks looked at those deals as huge wrongs on the IT world...." Really? On which planet? Definately not this one. We had a Sun exec come over from the States and gleefully tell us hp had bitten off more than it could chew and the whole deal would choke the combined HPQ to death, all to Sun's advantage. I still remember the Sun reps going on and on about how they were going to attack the old Compaq Alpha base to make sure "one plus one didn't get to equal two". In actual fact, they did pinch the phrase from FSC, but despite much FUDing they both failed to stop hp keeping the majority of Alpha houses loyal.
"....It was, and still is, a common refrain that HP killed one of the best CPU's to come out (ALPHA)...." Common where, on Alpha fanboi sites, or in Sun FUD guides? Compaq were already planning to kill Alpha before the merger as they foresaw the problems with developing RISC further, something Sun ignored until far too late. Certain of the peripheral technologies pioneered in Alpha, such as embedded memory controllers and inter-core mesh connectivity, lived on with Alpha engineers that moved to AMD and Intel. The market kept the interesting bits alive. The rest died from lack of customer interest in the face of more promising competitors, just like with SPARC.
"....HP has outsourced most of their IP and by them buying companies that actually created technology instead of buying/renting it was widely chastised (especially by Sun people)...." Surely you mean "widely FUDed by Sun people"? It certainly hasn't been "chastised" on Wall Street. Also it's strange then that hp's labs are still working on ground-breaking technologies such as graphite nanotubes, areas where Sun can't play from lack of funds. Face it, just because the Sun FUD says so it doesn't make it true. What you also fail to admit is that - unlike Sun - where hp has outsourced or licensed its technology there has been a profitable return. Sun's dramatic lack of profitability isn't FUD from anyone, it's a market fact, hence McNeedy's desperation to find a buyer before all his shares become worthless.
"...At least if IBM buys Sun they will keep the better stuff and add to it. HP on the other hand would put it in a closet and let it die or sell it to another company and rent it back....." Hate to burst your bubble (OK, actually I'm quite happy to), but take a look at IBM's history and you'll see a history of companies bought and products "IBM'ed" to death. Most IBM purchases fall in two camps; strategic, to add an area where IBM doesn't play; or competitive, where IBM is looking to remove competition. Even truly strategic purchases often lead to a dead product within a few years. An example of the competitive purchase is PSI, where IBM bought up a potential threat to their mainframe business. Whilst Sun is not much of a threat to IBM, it is still more a competitive purchase than a strategic one as Sun brings NOTHING that IBM don't already do (and most of it IBM do much better). MySQL? - IBM has the long-established DB2, which is a real enterprise database product. SPARC? - Power is much stronger, and x64 already a proven better alternative for the low end. Galaxy? - xSeries is far superior (and more profitable). Slowaris? - there is both the existing AIX business (more profit than Slowaris) and the profitable Linux services work IBM do on everything from mainframe down to xSeries. It is highly likely no current Sun product will even make it past the next few years under IBM's control without being declared obsolescent
"....(Matt, please don't bring up printers in this context. No one thinks that HP's "advances" in printing have added anything to the IT world in general)" Maybe not, but they sure keep the hp shareholders a lot happier than the Sun ones, and provide a profit that can be ploughed into other areas of development in a way Ponytail and McNeedy can only dream of. Is it comfy down there with your head in the sand?
"See you next Tuesday" Doubtful, seeing as I'm on holiday then. Yikes! Have the Sunshiners moved on to stalking now? Is this a new development on their buy-Sun-or-the-puppy-gets-it sales technique recently announced here in The Reg forums? Looks like I'm going to have to buy the bunny a stronger cage.
Tell you what, why don't we meet on neutral ground? I suggest House No 3, JC Castle, 18 Shan Tong Road, Tai Po, Hong Kong. I'll be the gent with a videocamera, I suggest you wear something I can recgonise you by such as a pink T-shirt with the words "Sally Hayfron died of AIDS from letting Zionist gays ride her", that should make you easy to spot.....
Wasn't the MDF feature patened by Amdahl corp before IBM ldoms?
I remember MDF on the 580/5890 series before ldoms for some silly reason.
(MDF = Multiple Domain Facility)
Careful, when IBM priced amdahl outta business, cisco and sun benefited
by picking up the engineers.........
"Sun should have cut R&D a long time ago, and if it had, maybe Wall Street would not be so heavy on its back these days."
I disagree. Wholeheartedly. If this economic crisis tells us anything it is that Wall Street is wrong. There is no way in the world that Facebook should be worth more money than Sun. Sun did the right thing. If all companies only aimed to please the stock market then we would still be in the stone age. Wake up people!
I think what Jesper is trying to show is the hypocracy of Sun's open source strategy and the Sunshiners posting here about "free" Slowaris, by highlighting Sun's activities during the SCO affair. Sun also showed their true colours back in 2004, when they inked an agreement with Microsoft to protect their commercial StarOffice product whilst giving MS the right to sue any users of Open Office installed after April 1st 2004. This was widely read in the Linux community as Sun asking M$ to get rid of their Linux competitors, it must have been very frustrating for McNeedy and Ponytail when M$ simply did nothing. And the Sunshiners wonder why the Linux crowd just don't trust them an inch.
IBM has a proven history of donating code into the Linux community, which was why SCO went after them, and why the Penguinistas took afront to Sun's "licensing" UNIX from SCO. Sun only "opened" Slowaris in a desperate attempt to create a new support revenue stream to prop up their collapsing sales. Ironicly, if OpenSlowaris does survive the Big Blue Wave, it may actually become a real open OS under IBM.
Let's cut the geeky flame wars and try and agree on some facts. IBM have a ton more money than Sun, and have ridden the Linux wave pretty well in the large accounts where they make their real money. Sun missed the boat and despite some astonishing innovation in their SPARC/Solaris heartland have not been able to catch up and convince people to stay with them instead of defecting to one of the other vendors.
Those are the facts. Now the opinion.
If you are IBM, what's in it for you? You might acquire Sun to get their customers, or their current or future technology/IP, or their people.
"Sun's customers", I think is not sufficient reason to pony up $6bn. Telcos and academics for example, both famously loyal Sun groups, can be picked up for free simply by waiting for Sun to die. (Academics can also be 'bribed' more cheaply: $1m worth of Linux blade servers to a college buys you an awful lot of goodwill.)
"Their people". Sun have some really, really good people...plus some idiots. I think IBM could pick up the Cantrells and Goslings for much less than $6bn. Bechtolsheim might be more expensive...but he would probably not jump anyway. But he might not say no to a few mill in seed money for his next startup. Cisco do this all the time; they fund a bunch of Cisco execs to leave the mother ship, build a startup and then buy it back.
"Their innovation". Very hard to put a price on this one. It is Sun's crowning achievement that they continue to innovate through thick and thin. Are DTrace and ZFS worth $6bn? They're certainly stellar technology. But $6bn? No. Unless, that is, the patents for them are so broadly granted that they would permit IBM to go after netapp, emc, hitachi and so on. I really don't think IBM would risk a patent war like that.
Conclusion? IBM should not buy Sun. If there are things in Sun that they want, they should destroy Sun in the marketplace and then pick up what they want for a song.
Food for thought #2: What about RedHat buying sun for their technology? Buy the business, sell the galaxy line to Dell, and put zfs and dtrace wholeheartedly into linux. That would be interesting indeed.
"What about RedHat buying sun for their technology? "
You forget that Sun makes more money from software than RedHat. RedHat could not possibly afford Sun as their Market Cap is only 3B right now... Sun could buy RedHat though. Wouldn't that be a funny change of events.
I'm just blurting now...
Hi,
Agree with AC about dropping the flame war - is much better for all of us - i'm tired of seeing people, especially Jonathan Schwartz, being abused with very personal and unfair comments
There is no arguing with outright prejudice and its surely time for some people in our industry to learn to grow up even if just a tiny bit please?
IT execs and all of us in IT, either as suppliers or customers, are often doing the very best we can in challenging circumstances and backgrounds.
It appears to get just a little more challenging each year, and if anything the only constant in IT is accelerating change, and all this in a very fast, sometimes hard, and rapidly changing industry that compared with the financial services industry right now, has so very much to feel and that we should be proud about
There is fantastic IT success all around us The Register being a prime example, over the years getting a better and better
. . . yes for sure some spectacular failures also with some vendors and IT projects . . .
Why is it always the large scale government ones? Its got to be greed surely and not incompetence?
Does anyone agree that the pace of change and volumen of information definitely appears to have picked up substantially in the last several years and months?
It is a very successful smart industry and some of the biggest cash surplusses are held by the IT industry from Cisco on down and they should be put to good and safe use for the benefit of all with more IT initiatives and projects for more jobs
We all face a Golden Future in IT !
IT is the lead industry in terms of setting strategy, marketing, sales, operations, services and increasingly sensible core finance as well
--
Back to An IMAGINED IBM SUN DEAL :
Am personally for a merged acquisition especially if jobs can be reallocated and preserved - of course this is the hard part than requires much vision hard work and finesse -
- IBM have been challenged in the past they COULD bring success here
Downside is how do you preserve, if you can, Sun's innovative culture and high R&D spend to keep the ideas and practical realisations flowing?
Purer Speculation:
It could be one of three S's driving the deal or another outside factor -
SAM 1. SE Asset Management own a chunck and may prefer an industry buyout if this can be achieved to realise the full value of their considerable investment and of course there are several other large scale institutional investers with substantial slabs of Sun
SAM 2. Sam Palmisano and his executive and strategic schemes - to what extent is it safe for them to do this right now when during the last quarter's analyst calls score of firms said that visibility beyond current quarter was unclear. There is a clearer year to year and sequential quarter to quarter trend right now of course and no one can call the inflection point for growth again yet.
SUN Board itself with or without institutional investor backing
Out of the Blue; Cisco, HP?, Dell?, even Microsoft one of the other top 50 IT vendors
Also key, is IBM persuaded itself that they really want to do the deal, they are doing fine without, but it could be a massive lost opportunity to let this one go.
The strategic opportunities on this if you really think about it are boundless
IBM could regain a lead in Enterprise Storage with this deal - its also rumoured that they hired the ex-EMC Symmetrix designer, a new high end enterprise storage offering truly worthy of the Z mainframe could be most interesting pitched against Hitachi's Excellent USP V and newly revamped AMS and EMC's market leading DMX and CX and HP's EVA
Couple this with Sun's modular open storage and best of IBM and Sun enterprise tape and this would really Rock.
Plus of course a blending of IBM and Suns growing influence and innovation in Tier 0 Solid State Disk
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NO DEAL
No comment on this deal too long could prove to be a bit damaging to IBM and SUN both
Leave the deal and some Sun customers will defect anyway and this appears to be happening already
High end customers cannot build resilient long term infrastructures with solutions from weak vendors and Sun unfortunately due to business volatility and uncertain economic environment and less than optimal strategies and sales execution plus ongoing speculation about their future has been very unfortunately weakend
IBM could do a lot with Sun's education sector lead and public sector involvement as part of its smart infrastruction for better decision making initiatives and drives
IBM are good at strategic considerations and can change on a dime if and when they have to - witness the success of Global Services
As above Deal Drivers - could be . . .
SAM 1 South E Asset Management - backed with other large insitutional shareholders or a lead by one of the others
SAM 2. Sam Palmisano and his strategic executive teams
SUN. Realisation by Sun board with the new directors that the best interests of Sun are served by a trade sale
A trade sale in the current environment is going to be difficult but not impossible and this is a very interesting deal unlike any before in scope and scale - if got right it represents a sea-change and seismic shift in enterprise IT and innovation
"Indigo" would have a powerful set of parts and capabilities to make interesting jigsaw solutions, clouds and pictures to help customers from backend always available core IT all the way forward via public and private clouds and the partner ecoscope to customers screens and device screens
If the solutions delight and exceed customer expectations and meet the needs and untapped wants of the existing IBM and Sun customer base, and can attract new business from outright new busienss and the competition then the right profitable growth numbers will follow
Profit is not a dirty word. The IT industry needs increasing profits but not profiteering.
Outright greed and politicking for personal gain and someone else's loss in not good though.
Witness the banking and finance industries
Sun has tried profiteering at an extreme - look at some of the margins and reckless quarterly 7% margin increases in some big customer bases in the past - especially before the qualification of Fujitsu's Solaris offerings as being fit for purpose in the enterpise space on the dual vendor ticket that finally broke the Sun monopoly even to just a duoploy in the Solaris infrastructure business
And I should know!
Astonishingly, at the other extreme Sun just have let so many things go for FREE and in my view , this was unnecessary also
There is a happy medium and mix. Healthy profits and healthy, happy great value customer deals.
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Still as of today no official word from either side though
Brass Balls . . . Or,
All just a rumour? Due diligence behind the scenes? Who knows?
Sun's problems have not been technology, its not always their people, its very unoptimal execution on sales strategy backed with unoptimal marketing campaigns.
The Customer really didn't come First. Nor sometimes and regrettably the staff but i feel the intention was always there
Sun worship a bit too much at the altar of technology !
People, Products and Services and then Profits
Not just techology as lead
By the way when Scott McNealy was a the CEO helm I admired the fact that he did his utmost to avoid layoffs, and the employee stock plan he promoted benefitted many families
Sun is rich in very highly innovative IP of industry wide current and future significance
They are a bit like an enterprise Apple
Free open source and the share campaigns are very good and helpful to both the industry and customer base.
The strategy and execution of the pull through of higher value skilled solutions and service wrap have been less than optimal plus less than optimum
We're back to sales and marketing execution and insights
Its going to be interesting to see if there is a deal, and if and when it goes through, who and how, and what the next few days, weeks, months and years hold for Sun
I wish Sun and IBM well if they are talking
If they pull this one off, I see a Golden Future ahead for both !
Ray
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