Did Cisco UCS bring IBM and Sun together?

By Jim Duffy on Wed, 03/18/09 - 3:26pm.

Did word of Cisco's development of a blade server system -- which took two years and must have had tongues wagging from Silicon Valley to Armonk -- force today's rumored union between IBM and Sun? You can bet it at least heated the discussions up.

The Wall Street Journal reported today that IBM and Sun are talking about a marriage that, for IBM anyway, will bolster its Internet and software prowess, and presence in finance and telecommunications markets. The two share a heritage of not being reliant on Microsoft software and Intel processors, and a common interest in open source technologies like Linux.

A deal could be struck as early as this week, for $6.5 billion, the WSJ reports. It would obviously strengthen IBM's position against data center rival HP -- Sun and HP have long been heated competitors in workstations and servers -- but could also be a pre-emptive strike against Cisco and its broadening data center ambitions, highlighted by this week's rollout of the Unified Computing System. UCS is an integrated server, storage, network and virtualization platform that incorporates blade servers internally developed by Cisco -- an apparent snub to longtime partners IBM and HP, the leading incumbent providers of blade servers to data centers.

Acquiring Sun would bolster IBM as it takes on a new rival, Cisco Systems Inc., the networking company, which this week announced that it would start selling a server of its own. On Monday Cisco chief executive John Chambers said that Cisco would continue to work with IBM despite the fact that the companies would be competing head-to-head on servers.

The WSJ notes that the deal would strengthen IBM's position as the world's largest server maker. IBM had 31.4% of the market last year; H-P was second with 29.5%; Dell third with 11.6%; and Sun ranked fourth, at 10.6%, according to the story, citing data from IDC.

The paper did not say how long the two companies have been talking. But word of the talks coming the same week as Cisco's launch of UCS is more than coincidental...

Forbes agrees:

Centerstage in the computing world was dominated on Wednesday by the prospect of a pairing of IBM and Sun Microsystems. But a third pivotal player lurked in the shadows, one that may have given IBM and Sun the final push they needed to embrace: Cisco.

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