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IBM/Sun deal won't be about the software, experts say

Software overlap could make a multi-billion-dollar price tag hard to justify

By , Network World
March 18, 2009 05:33 PM ET

Network World - If IBM swings a deal for Sun it won’t hinge on open source interests or software, where the two companies have enough overlap to negate any strategic value and make a multi-billion-dollar price tag hard to justify, according to observers.

One carrot would appear to be Java, an area where IBM has been a tireless advocate, partner and investor. Some think the Java brand may be valuable enough to entice IBM, but not at the rumored $6.5 billion price tag for the whole of Sun. Others say the Java franchise is in a lull that seriously downgrades its value.

“Sun has tried over a 12-year period to be a leader in Java middleware and they have not accomplished much,” says Dana Gardner, president and principal analyst for Interarbor Solutions. “And it tried to double down with open source projects such as Glassfish and OpenSolaris, but the Java Community Process right now is probably the weakest it has been.”

GlassFish is an open source application server, while OpenSolaris is the open source implementation of Sun’s Solaris operating system.

“If IBM thought highly of OpenSolaris or GlassFish, there is nothing preventing them from developing around the community process and creating code,” says Gardner.

The same could be said for productivity software, where Sun has developed StarOffice off the OpenOffice.org project while IBM has developed Symphony around the same code base.

It is unlikely that IBM would scrap the work it has done over the past few years to weave Symphony into its Note/Domino collaboration tools and its emerging collection of social networking software.

In addition, Sun is the primary sponsor of OpenOffice.org and the primary contributor of code to the project, a role IBM would have to assume.

IBM already has an established middleware (WebSphere, DB2) and tools business where Sun could add little value.

IBM and Sun also have competing directory technology and identity management tools.

Sun’s MySQL database technology is hot in the Web 2.0 world and presents an opportunity for IBM in terms of its datacenter strategy, but clearly it overlaps with DB2 from an enterprise perspective.

“Sun would be an atypical acquisition for IBM, which usually focuses on assets and strength,” said Scott Crawford, managing research director for Enterprise Management Associates. “IBM’s acquisitions typically support an already known strategy and I don’t think this one would fall under that category.”

Crawford also said the alignment of IBM and Sun products has to be evaluated from an IT perspective. “There is not a direct overlap in the Unix space so does that mean an end of life for Solaris and SPARC? That would be an imposing question for many users.”

While others agree that open source projects and corporate software will not seal an IBM union with Sun, they feel there are nuggets of value in the Sun portfolio.

“If IBM were to buy Sun there would be no question about who owns Java,” said one insider close to Sun who asked to remain anonymous. “The Java brand is important because it is one of the predominant platforms; it is how software is built. All the application servers run Java.”

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