The consolidation in enterprise technology is upon us. Once mighty Sun Microsystems is now reportedly; in talks to be acquired by IBM for a mere $6.5 billion. That is two quarters of revenues for Sun. If you factor in the $2.6 billion in cash and short term investments on Sun’s balance sheet, the true offer is closer to $4 billion. Sun’s shares jumped this morning 65 percent.
Sun’s main Solaris server business has been suffering for years from the onslaught of cheaper open-source Linux servers, which it now offers as well. But Sun still holds big presence in key industries. The play for IBM is to consolidate its server market share in the face of increased competition from HP (which bought IT consulting giant EDS last summer), and now Cisco (which is trying to expand into the server and storage markets). Sun’s commitment to open standards also meshes well with IBM’s philosophy. Remember, it owns MySQL. (Larry Dignan at ZDnet has a good analysis here).
The acquisition would create an even greater mish-mash of technologies under the IBM umbrella, but IBM has never had a problem selling incompatible systems. Sun also has a deep wealth of technology patents and engineering talent that IBM will be able to redeploy.
But if that is all that Sun has to offer IBM, any potential acquisition would just be tactical—a move to shore up market share in traditional data center sales until cloud computing changes the business entirely. In fact, Sun is planning on announcing today its own cloud computing offerings, which was recently bolstered by its purchase of Q Layer. Sun’s approach to cloud computing is to offer enterprises mission-critical cloud alternatives which can also play well with the public cloud offerings out there from Amazon, Google, Salesforce, Microsoft, and so on.
That transition will take many forms, from turning corporate data centers themselves into one large virtualized computer to offering true compute, storage, and database services in the cloud.
Good move for Sun, the company has been hurting
BTW Erick hyperlinks are not showing up – the “<ahref” is being displayed on the page
thanks Jason, that was messed up. fixed now
Good move IBM. JavaScript was the best version of Java that Sun ever came out with. Now they can own it.
JavaScript is such a cool version of Java, where else can you get code that looks like this?
javascript:var s=[105,116,39,115,32,97,32,106,111,107,101,33,32,100,111,110,39,116,32,102,101,101,100,32,116,104,101,32,116,114,111,108,108];var v=”";for (t in s) {v+=String.fromCharCode(s[t])};alert (v);
dang Techcrunch changed my quotes. try again:
javascript:var s=[105,116,39,115,32,97,32,106,111,107, 101,33,32,100,111,110,39,116,32,102,101, 101,100,32,116,104,101,32,116,114,111, 108,108];var v=”;for (t in s) {v+=String.fromCharCode(s[t])};alert (v);
Grrrr
javascript:var s=[105,116,39,115,32,97,32,106,111,107, 101,33,32,100,111,110,39,116,32,102,101, 101,100,32,116,104,101,32,116,114,111, 108,108];var v=String.fromCharCode(32);for (t in s) {v+=String.fromCharCode(s[t])};alert (v);
Languageexpert??? LOL! :-)
All of this is over my head. I can’t understand all of this business/MBA mumble jumble. Is this TC or the Wall Street Journal?
…. So what? we Indians are always confused, but that will never stop us from offering bs and spamming – call them opinions, please. I have spoken.
Anjali Sen
From India
I told you so an entire week ago. I sold all my JAVA to buy C with whatever I had left. I am still not complaining as C outperformed Java 3 going on 4 fold today.
http://www.techcrunch.com/2009/03/11/socialmedia-launches-interactive-word-of-mouth-social-ads/#comment-2652071
Even a 60% can not eclipse the nearly 400% jump of people’s emotional investing behavior. Go, go USA!!
This is really amazing. What’s even more striking is that someone leaked this rumor here on techcrunch among the comments several days back. I should have bought at 4.80!
Somebody should email Kevin Bailey @ Goldman Sachs with:
ahhahahahahahahhahahahahhahh ahhahahahahahahhahahahahhahh
ahhahahahahahahhahahahahhahh
ahhahahahahahahhahahahahhahh
ahhahahahahahahhahahahahhahh
ahhahahahahahahhahahahahhahh
IDIOT!
sorry, I meant David Bailey, I can never get his name right. For good reason.
Unless IBM has been pitching him to drive down the Sun price and increase favorable terms for IBM…
You know, that’s pretty cool that this was rumored here on TC. I wonder about how easy or difficult it would be to merge the two though. I mean, the sheer size of the two companies is enough to make any CEO dizzy just thinking about it. And the infrastructure, though somewhat similar, may be entirely different (don’t know, don’t work at either place right now, or for that matter, at all).
But, can IBM truly make Sun more profitable than Sun could?
You can tell anything and everything that’s going to happen about a week or 2 before it does. It only effects people when it’s official.
So if you do a bit of research, you can really do a good job predicting markets. I knew this was going to happen, and I sold in the 4s anyway because something even more crazy is going on right now.
I gotta go to work, but keep in mind that if you troll around google groups and forums long enough you can separate the crap from reality. A lot of execs and knowledgeable people use Google groups under anonymity, and no you can’t be certain, but you can guess.
IBM is buying Sun for the sw business and will most likely (imho) sell off most of the hw stuff. Now IBM will finally have control over JAVA which they have wanted for many years AND they get MySQL and the whole open source portfolio which will drive considerable revenues for the consulting business. So for Sun employees I think the HW folks are toast!
…good comments
However, i like “can also play well with the public”. Ha
Sorry if i am wrong, take my apologize. More better if Sun Micro get monetize support, because they build a lot of great software or tools. IBM, it just bussiness for them.
I wonder if IBM even has the long term financial flexibility to pull this kind of deal off? Or are they counting on SUN’s continual long term growth plans in order to pay for their own acquisition.
great move Sun!
TechFilipino
I truly believe this acquisition will happen. IBM is eliminating a competitor and picking up a great asset in MySQL. That is easily worth $4 billion.
It is unfortunate that Sun Micro has 30,000+ employees getting the pink slip if this deal is finalized.
Update: Looks like IBM is going to pay between $10 and $11 per share. The deal will be finalized by the end of this week.
.. correct me if I’m wrong, is Sun suppose 2 compete with Microsoft?
… or they lost the battle and gave up.
Java is cool but there are a lot over head w/the syntax. 2 long + Java 2 slow
@Du Long
Java is not slow! It can be even faster than C++!
keep dreaming.
or live in woods like alessandro
IBM wants to grow their service business, taking over the data centers from enterprise customers.
Sun has a large installed base of enterprise customers. The purchase is a trojan horse for IBM to gain more market share in services.
The Sun server business, proposed cloud services, and attack on Microsoft with cloud office are non-issues in this acquisition.
MySQL isn’t really what IBM is after, its JAVA. IBM would own JAVA. They have ALOT (ALOT ALOT) invested in JAVA and to pretty much own it is worth anything to them. Anything else that comes along with that is icing on the cake but JAVA is what IBM is after.
IBM has major investments in Java and java technology. Currently java is not ‘open source’ in that Sun still owns the rights to it. Now I don’t know about the hardware side of the business but as far as the software is concerned there will be several products that will beat their heads together. NetBeans is one that will really be difficult to resolve. IBM has a huge investment in Eclipse and the rivalry between NetBeans and Eclipse communities is aggressive at best. What would IBM’s solution be here. Kill NetBeans and ostracize a very large community of java developers or continue to develop the product committing valuable resources to a competitor of it’s own beloved Eclipse? There are a myrid of other software products ( all java based and targeted towards java developers and markets ) that compete head to head between these two compaines so this is going to be interesting.
Given Cisco’s move into the server space, could they possibly jump into this and go after Sun? It would be a lot easier than greenfielding a whole server business and a “local” merger will be easier to pull off than one from Armonk, NY.
I don’t see Cisco going after Sun. Cisco has the cash to do so, but I just don’t see it happening.
Cisco released their Unified Server today, starting a direct war with IBM, HP, Dell and Sun. They don’t need Sun’s server business. IBM on the other hand would love to have Sun’s networking technology. Crossbow is pretty incredible and will revolutionize virtualization and data centers. If IBM can own that technology they have a good shot at giving Cisco a run for their money in data center networking.
Super company! With IBM’s consulting to Fortune-500 companies and Sun’s software/DB/Cloud approach this could be a very successful company!
Sun would fit better with Cisco. All IBM will do is kill it like they kill all their acquisitions.
R.I.P.:
Java
Glassfish
JavaFX
Solaris
MySQL
Stanford
Silicon Valley
I am going to go jump off a bridge
Don’t forget about the death of Swing in favor of SWT bloat. Yuck. IBM will destroy Java just like it destroys everything else
Yes. You are true.
This is very worrysome for Java and derivated…
IBM supports more Java in production than Sun. Have you bloggers ever even heard of an IBM JDK? Kill Java you wish, they will own Java with this acquistion.
Finally, someone needs to stop the everlasting bleeding and barly hanging in there of open source. This model does not work, time to get back to busines.
Nice post! Check out my site too at http://macmaniapodcast.com.
Should read “Once-mighty Sun” so it reads easier.
Wow that is a very nice gap up. Have been watching JAVA for awhile. It made a nice breakout through the 200 period EMA today with incredible volume! :)
I’m a Sun employee with tons of stock (and lots of restricted shares) from the past decade and even this jump is pretty worthless. Sun will never make my options worthwhile and I know are in the same boat. All options averaged, my price point would still be over $100 per share.
If IBM bought Sun, they’d only care about getting Sun’s customers and maybe mysql. They couldn’t care less about most of the software side and I suspect most of us will be strategically _reduced_. Not that it matters since we have plenty of layoffs to go, anyway. There are another 5,000 layoffs to go out of the original 6,000 announced in November.
This is all probably untrue, anyway. Some Sun higher up probably fabricated the whole story to get out from under his or her options.
buhu
now you wine and moan after you write open source software overriding patents and intelltual property destroying thousands of other jobs. what a nut.
For my part, I’ve never been part of any open source group, product, or development within the framework of my job.
I hope that IBM will continue on with Java if it acquires Sun MicroSystem. Better that IBM that wants to acquire Sun rather than Microsoft, since they will kill Java (they attempted to do that in the late 1990s).
this deal is only a rumor and hasn’t been verified yet. don’t be a bunch of Chicken Littles screaming, “the sky is falling” when it’s not.
http://online.wsj.com/article/SB123739269129772155.html
rumor or not to buy or implement sun at all starting now is risky
How depressing.
Cisco will buy Sun
IBM will buy Cisco.
HP will buy IBM.
Microsoft will buy HP.
We will only have Microsoft.
Who is HP? When is the last time you saw HP-UX in the data center.
These tech companies are sitting on so much $$cash$$ right now…..gotta figure out a way to deploy it.
not in open source.
A force to see in action, Microsoft surely clutching it’s hands.