I’m not the biggest fan of Sun Microsystems CEO Jonathan Schwartz. Okay, I am not a fan at all. But I have to give the guy credit for keeping up company morale, because when I polled my Sun contacts recently on why they thought IBM might be interested in buying the company, each thought it was because of his or her division. What charming — if misguided — loyalty. These people still feel good about their company.
Of course they are wrong to do so.
I know that Sun walked away from the deal, by the way. I’m not THAT out of touch with the world. I just think that understanding the Sun mindset might help explain that bonehead move.
So here’s the result of my unscientific sampling of a too small group with the question being “Why would IBM want Sun?” Remember these answers came from inside Sun, itself. Notice nobody said “servers”:
1) StorageTek. There’s a big market in z/OS storage still and Sun has
been stepping on their nether regions with it ever since they bought
STK. As depressed as Sun’s price has been, I can imagine (with no
numbers to back it) that getting that track back into competition with
the big storage guys could be appealing.
2) Solaris. There are several ways that Solaris really is the best
UNIX derivative around, and AIX just doesn’t have all that big a share
of the market. Open source seems to be winning in general in that
world. AIX shares code with some pieces of AS/400 though, so IBM
really doesn’t want to open the source to AIX. AIX doesn’t do intel
well. Solaris in a nevada-plus version could replace AIX, with Andrew
3) Sun Labs and Java. Sun is better at looking *cool* than IBM, IBM
wants to buy that. Even further, IBM has made a huge investment in Java that has paid-off in enterprise application success. Then Big Blue aoke and realized its future in this market was totally cpongtrolled by Sun – a company IBM viewed as being, at best, adolescent. IBM wants to control its Java destiny.
4) R&D in general. For all its failings, Sun has continued to spend about $3 billion per year on R&D, which is nearly the adjusted price IBM would be paying. There has to be some cool stuff in there.
5) Fishworks/Amber Road, Mike Shapiro’s storage appliance. This system is clever but not THAT clever.
6) Services. Hardly. Not even close.
Schwartz and Sun have a pretty high opinion of themselves despite years of losses. So they walked away from IBM’s last offer. But don’t expect them to stay away for long. There simply isn’t another buyer for the whole thing and Sun doesn’t have the patience to cut itself into pieces.
And the real price IBM will be paying is at least $2 billion less than you read in the newspaper, because Sun – like a lot of tech companies – has profits stashed overseas that it has been unable to bring back.
IBM knows how to play that game, too.