Sun/IBM would have been a good idea for many, but not Microsoft

UPDATED 0406: Over the weekend, talks between IBM and Sun have reportedly broken down and now the deal looks like a no-go. The story is eerily similar to the Microsoft/Yahoo talks. Sun's board rejected a formal acquisition offer by IBM on Saturday, considering the offer price of $9.40 per share too low, the Wall Street Journal said. Sun's stock (NASDAQ: JAVA) has traded between about $16 and about $3 over the past 52 weeks.) Sun was reportedly also concerned that the offer gave IBM too much room to walk away according to the WSJ's unnamed sources. On the other hand, this sort of posturing -- with one side walking away to hold out for more money, is pretty common in late stages of deals.

Scuttlebutt says that IBM and Sun are very close to an acquisition agreement. IBM, Sun and Microsoft have had long-standing, complicated rivalries and if IBM really does buy Sun, Microsoft will be looking at a brand new mega competitor. But Microsoft's problems aside, the merger is a good idea for many reasons.

Sun is a company sitting on a lot of great enterprise technology with an enormously loyal development community. The company has struggled to figure out a business model in an era where hardware is often throw-away dirt cheap and software is mostly free. Now, it is true that IBM has a deserved reputation of being slow and stodgy, but the company is run by insanely savvy business people and that's exactly what Sun needs.

For the most part, enterprise software development can be divided into two camps, Sun's Java and Microsoft's .Net. IBM has been a member of the Java camp. It has been a big contributor to Java projects like the open-source Eclipse, it has had heavy participation in the Java Community Process (JCP), among other examples, notes a post in the JavaWorld Daily Brew blog.

Not to say all would be jolly in the Java world if IBM takes over. Sun might have been a control freak, but IBM, with its long history of patents and R&D, is a scary proposition to Java developers. They are worried about licensing issues and the future of some of their favorite platforms like NetBeans, given that IBM's competing IDE, Eclipse, caused bitterness between proponents of each.

Where Microsoft stands to lose (in the short term) is that the IBM/Sun behemoth could become the largest, public, profitable software entity that espouses a mostly open licensing model -- that is, if IBM is up to the task. IBM has shown how money can be made by offering GPL software supplemented with licensed software or services. Microsoft represents the opposite -- a company making virtually all of its money on proprietary software licenses and defending its patents the old fashioned way, in court. (But, those predator ways have to change and it knows it, with regular reminders from the European Commission lest it forget). Sun stands somewhere in the middle, exerting control over an open language and holding many legacy licenses, and many open ones. Says Josh Fruhlinger on JavaWorld's Daily Brew bog:

"Of course, of primary interest to Java developers is whether IBM will handle Java licensing any differently than Sun has done; a test case that could tell us how the future will go may come with the long-running Sun-Apache dispute over compatibility kits. Chris Dibona, Google's open source chief, is extremely sunny on that point, saying that 'I think IBM would not be as restrictive about the use of the TCK.... IBM has been a huge user of Java and a huge supporter of the Java projects.' ... We have very little evidence on how good IBM is at letting go of its own code. That's because, other than fairly obscure packages like Cloudscape (which itself had its origin in Informix, a company IBM acquired), IBM's been more a user and extender of open source offerings."

Where Microsoft stands to gain in the short term is market confuson. This could even last years, depending on how fast IBM can sift through Sun's product portfolio to determine which overlapping products to keep, sell, or integrate. At least that's the public position Microsoft's Steve Ballmer took about two weeks ago when the merger news first broke. Still eventually the dust will settle.

Do you agree that competition for Microsoft from the likes of an IBM/Sun could be a good thing for Microsoft customers?

Visit the Microsoft Subnet web site for more news, blogs, podcasts. Subscribe to all Microsoft Subnet bloggers. Sign up for the bi-weekly Microsoft newsletter. (Click on News/Microsoft News Alert.) Microsoft's voice at VoiceCon is not on the show floorApril giveaways galore: Microsoft UC and Office 2007 books, free training from Global KnowledgeRogue SharePoint sites pose security menaceMicrosoft's Linux distroServer Core 2008 – SQL Server not supported Follow Microsoft Subnet on Twitter
Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2009 IDG Communications, Inc.