Tag Archives: sun

IBM to Buy Sun? What Would It Mean?

According to the Wall Street Journal, IBM is in talks to buy Sun Microsystems. The fact they are even discussing it tells me that IBM is in sound financial shape and is looking to take advantage of the down economy to make acquisitions. It is reported that IBM would pay at least $6.5 billion in cash, which  is the equivalent of double Sun’s current stock value.

So what would it mean if the transaction were to take place? As a mainframer, the first thing I think of is storage. Sun bought Storage Tek in 2005, and purchasing Sun would give IBM a very large share of the market in mainframe storage. A big concern in such situations is that less competition could mean higher prices, but it’s not certain that there are more big iron dollars available – it could just mean that IBM gets a larger share of what’s currently there. Another thought is that Sun has been struggling, and that IBM could breath new life into its product lines. However, there is a lot of overlap, so some Sun lines would certainly be phased out or merged into IBM lines.

But, it’s not all about the mainframe. The buyout could give IBM a near two-thirds share of the UNIX server market. There are many interesting angles to the Sun open software. Since IBM is big on Java, one would expect Java to blossom under IBM. But what about MySQL? IBM has DB2, and it is hard to imagine that they have much interest in growing a competitor to it.

Whatever the benefits, IBM will have to consider the potential legal headaches it could bring.

It will be interesting to see what unfolds – if anything. It’s all speculation right now. The only thing for sure now is that the speculation has been good for Sun stockholders so far.