IBM bid for Sun could be a blocking move

IBM bid for Sun could be a blocking move

Summary: I agree with Dana Gardner that IBM's reported $6.5 billion bid for Sun makes no sense at all.


I agree with Dana Gardner that IBM's reported $6.5 billion bid for Sun makes no sense at all.

Owning Java is not a business model, or not enough of one to help Sun meaningfully.

So, does IBM need chip architectures from Sun? Nope, has their own. Access to markets from Sun’s long-underperforming sales force? Nope. Unix? IBM has one. Linux? IBM was there first. Engineering skills? Nope. Storage technology? Nope. Head-start on cloud implementations? Nope. Java license access or synergy? Nope, too late. Sun’s deep and wide professional services presence worldwide? Nope.

But it does make sense if you were to consider the move as a strategic one that would block Cisco Systems or Hewlett-Packard from acquiring the company.

Cisco would get:

There are considerable synergies between Sun and Cisco:

- Sun has a large server business, Cisco is moving into servers.

- Sun has large customers in telecommunications and finance, two very large server markets.

- Sun has considerable R&D and IP in data center technologies, Cisco needs those capabilities if it is to rapidly succeed in its data center push.

- Sun has considerable expertise in building and running data centers.

- Sun has a services business that would aid Cisco in winning new business.

- Sun has very little overlap in products, technologies, or services with Cisco.

- Sun has extensive middleware.

- Companies buy systems and solutions - Sun would help Cisco move beyond just providing boxes such as its recently introduced Cisco Unified Computing System.

And there are some fairly decent Hewlett-Packard synergies in middleware, data centers, and servers.

An IBM acquisition would only serve to block an acquisition from IBM's competitors. And the relatively high valuation of Sun, in the IBM bid, about double it's prior market value, could be part of that strategy, to make it very expensive for an acquirer such as Cisco or HP, and thus more difficult to get shareholder approval.

If the IBM bid is a real one, it shows that Big Blue is very concerned that Sun could be a very valuable aquisition for one of its rivals.

Topics: Data Centers, Cisco, Hardware, IBM, Oracle, Storage

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  • In contrast, if MS, instead, is the one who take over Sun.

    They would get HEAPS of benefit and profit in long run from owning JAVA and Openoffice.

    Don't you think?
    • Assuming they got past antitrust issues (nt)

    • OpenOffice can't be owned.....

      OpenOffice is already GPL'ed and if Microsoft tried to shut it down, another fork of the application would be released. The same goes for Java, as Sun has released Jave as open source too. So these reasons are invalid.
      linux for me
  • I agree, this is a business move, not a technology play

    Sun has nothing technically that IBM needs, and 80 percent overlap in products that would have to be weeded out and discarded. No way that's worth billions.

    BUT, preventing Cisco from filling out their top-end server stack, gaining more blade technology, and gaining a very smart software engineering organization, THAT would be worth billions.

    Good move, IBM.
    • Sun is different

      There are no two cars that are the same.

      At 10 bucks a share, it's nothing expensive for CISCO to acquire. With 20 billions in the bank, and a very strong sales force, paying even 3 quarters of $20 of the original reverse split price is not a bad investment if CISCO decides to do so.

      Blocking is the wrong word.