IBM and Sun -- Why?

By Paul Rubens (Send Email)
Posted Mar 24, 2009


Paul Rubens
That's one of the principal conclusions that could be drawn from a very interesting conversation I had this week with Therese Lanowitz, a former Gartner research director and founder of Voke OS Roundup: Because all roads lead to the cloud, and the cloud leads to services.

But first things first. Thousands of column inches in the past few days have been devoted to the possible acquisition of Sun by IBM, but not much of it has looked at the why.

Sun appears to have decided to call it a day.

Looking back over the past seven or so years it's clear that Sun's hardware has not driven the business forward: To steal Lanowitz's pun, Sun has lost its spark. And its software should have been used to sell more hardware but wasn't. "Sun clearly doesn't understand how to be a software company, or a hardware company," Lanowitz said. "It made no real money on hardware, on software, on open source or on its acquisitions — it simply lost direction."

Given the state of the economy, it's perhaps not surprising that the company has apparently put a "for sale" sign on the front door. But right now it's a buyer's market. At the beginning of 2007, Sun's shares stood well above $25. Even allowing for a 60 percent jump since the possible acquisition was announced, Sun's shares are less than one third of that. You can't help thinking that Sun's decision makers have waited till things could get no worse before putting the company up for sale — it's senior management team clearly hasn't heard that the time-tested way to make money is to buy when things are cheap and sell when things are expensive, and not the other way around.

So what's in it for IBM? Beyond getting a company at a fraction of what it would have cost a year or so ago? Looking at the big picture, maybe it's not about hardware or software at all. Perhaps it's about IBM Global Services. As Timothy Prickett Morgan put it in The Register, "Every one of those wisecracks by Scott McNealy and Ed Zander a decade ago about 'the world versus IBM Global Services' may come back to haunt Sun's founders and employees."

Here's the argument: IBM is very keen on the cloud and its associated massively scalable global infrastructure. By buying Sun on the cheap (relative to historic valuations, at least) IBM gets its hands on a goodie bag of nice components for this infrastructure. Sun Storage? Very useful. MySQL? Could come in handy. The GlassFish app server? The NetBeans Java IDE? Why not? Java itself? What's not to like?

"By buying Sun, IBM can get all this relatively inexpensively — certainly for less than it would cost to produce internally," Lanowitz points out. "If IBM can turn all of the cloud promise into services, that is the attraction."

In a nutshell then, acquiring Sun leads to the cloud, the cloud leads to services, and IBM Global Services is there to take your money. Cash or check, either will be fine. That does leave the odd loose end though. For example, what about Solaris? It's certainly got plenty of users and aficionados, but would it fit in a cloud strategy? Not so much. Sun has a large share of the Unix market by whatever measure you choose to take, but if you were embarking on a huge and long term cloud infrastructure strategy, mightn't you be tempted by Linux?

Paul Rubens is an IT consultant and journalist based in Marlow on Thames, England. He has been programming, tinkering and generally sitting in front of computer screens since his first encounter with a DEC PDP-11 in 1979.

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