Sun: Are you nuts?

Major media news source are reporting that IBM’s purchase of Sun has cooled-off as Sun has rejected IBM’s $7 Billion purchase price. Many are comparing Sun’s decision to that of Yahoo’s to rebuff Microsoft’s purchase of the company. However, Yahoo is still the number one destination on the Internet while Sun is losing market and mind share.

Perhaps the leadership at Sun needs to look at a calendar and realize that the year is not 1990. Sun is not high flying, SPARC is not dominant, SOLARIS has lost steam, StorageTek didn’t pan out, the jury is still out on MySQL, Java is great but where’s the revenue, and their current open source push into virtualization is admirable but risky.

It pains me to watch a once great company with talented and dedicated employees continue on a march to extinction. I am a fan of Sun as I earned my Unix stripes on SOLARIS and SPARC systems. I am avid supporter of VirtualBox, OpenOffice, and Java. Additionally, I have been following Sun’s efforts to redefine the datacenter and cloud computing.

While all of these efforts are exciting and some are technically superior to the competition, Sun has lost the ability to move markets and create new paradigms. Let’s face it, to the dedicated individuals at Sun $7 billion is insulting. However, joining forces with IBM is better than continued layoffs, broken promises, and missed opportunities.


IBM may buy Sun: Why?

On September 2008, I asked the question, “Is the Sun rising on Cisco?”  If Cisco truly wanted to redefine the industry, then combining Sun’s portfolio with Cisco’s business and market acumen would have been brilliant.  Ultimately, Cisco chose to go the route of UCS while Sun remains an attractive takeover target.

Today, Reuters is reporting that IBM is in negotiations to purchase Sun for “at least $6.5 Billion.” However, I find it hard to believe that IBM would pay a 100 percent premium for a company that is losing money, talent, and market share. Additionally, the speculation is IBM wants Sun to bolster their server products but the diamond in the rough may lie within Sun’s Virtualization and Software Divisions.

Sun’s has many strengths:

  • Sun has impressive high-end and mid-range servers
  • Sun has wide and deep storage offerings including StorageTek
  • Sun’s OSS Reach: MySQL, xVM, Java, opensolaris, OpenOffice, GlassFish
  • Sun has a solid channel and international strength
  • Sun Solaris is still rock solid
  • Next generation database: Greenplum

What IBM would gain:

  • Sun’s 9.3% server market share
  • Database market share dominance over Oracle (DB2 plus MySQL)
  • Instant credibility within x86 virtualization and cloud computing
  • Increased market share in storage and storage back-up
  • End the Java feud and intellectual property war with Sun
  • Disruption with opensolaris, openoffice, xVM, and MySQL

The Risks:

  • Sun is bleeding money
  • Sun is bleeding talent
  • Sun is stuck in the dot-com bust
  • Sun needs to revitalize their channel (more products service)
  • Sun needs attention and leadership

In the end, I am rooting for Sun.  I wrote that “if there is any executive team on the planet that can revive Sun it is John Chambers and company”, but I am sure that IBM could do the same.  What Sun needs is a machine to sell, market, and develop their vision and strategy across an expanded channel and customer base; IBM fits the bill.

I hope Reuters is correct, and today is a sunny day for the employees at Sun and the industry at large.