Report: IBM-Sun Deal Talks Unraveling

IBM’s bid to acquire Sun Microsystems appeared on the brink of collapse Sunday, as the boards of the two companies jousted over price and terms. It’s not clear whether the deal is genuinely on its deadbed or the two companies are negotiating through media leaks.

The New York Times reported that IBM has withdrawn its $7 billion offer Sun’s board balked at a reduced deal price of $9.40 per share. The Wall Street Journal reports similar details, saying IBM withdrew its bid after Sun terminated an agreement to negotiate exclusively with IBM. But the Journal said a deal remained possible.

“Late-stage deal negotiations are often full of brinkmanship, and it’s possible the two sides are hardening their positions only to strike a full deal in the near future,” writes the Journal (subscription), which said one source “suggested the situation was ‘fluid’ and the parties were still in touch by phone.”

Analysts seem to agree that Sun has more at stake, and might see its share price drop sharply if the deal collapses. Sun shares were trading in the $5 range when IBM’s interest became public, well below the reported $9.40 a share price of IBM’s latest bid.

Sun Outlines Plans for Open Cloud Platform

Sun Microsystems had planned for today to be a big news day. But the early headlines are perhaps not the ones it envisioned, as Sun’s introduction of its retooled cloud computing platform was quickly overshadowed by reports that the company is in deal talks with IBM.

Sun (JAVA) is launching its Open Cloud Platform today at its CommunityOne developer’s event in New York. As expected, the platform will be built around open source technologies and feature “virtual data center” technology from Q-Layer, which Sun acquired last year. Portions of the Sun cloud will be hosted at Switch Communications’ SuperNAP data center in Las Vegas, as we reported last week. 

Sun is positioning its public cloud as an open source alternative to proprietary clouds, with an emphasis on open APIs and interoperability – currently a hot topic in the cloud computing ecosystem. The platform’s first two services, Sun Cloud Storage Service and Sun Cloud Compute Service, won’t be available until this summer.   

Sun Shares Soar on Report of IBM Bid

The battle for the data center is heating up quickly. Shares of Sun Microsystems (JAVA) soared at today’s opening after a report that the company is in talks to be acquired by IBM. The Wall Street Journal said that IBM has discussed an offer of $6.5 billion for Sun, a huge premum over the recent trading range of about $5 a share.

Sun shares soared 66 percent at the opening bell, up $3.28 to $8.25 a share.

The deal comes on the heels of Monday’s announcement that networking giant Cisco Systems (CSCO) is entering the server business, a development that has raised expectations of a competitive response from leading server vendors IBM, HP and Dell. Buying Sun would extend IBM’s status as the largest server vendor, and build on the company’s strengths in data center design and Green IT.

Sun Cloud Will Live at the Vegas SuperNAP

Sun Microsystems isn’t yet saying what its new cloud computing service will look like, but at least we know where it’s going to live. Sun will host its new cloud offering in the SuperNAP, Switch Communications’ new mega-data center in Las Vegas, according to Sun CTO Greg Papadopoulos.

“We now have thousands of cores at the SuperNAP,” Papadopoulos said in this morning’s keynote address at AFCOM’s Data Center World conference at the Paris Hotel in Las Vegas. “It’s a really fascinating facility.”

The hosting arrangement extends the relationship between Sun and Switch Communications, which is already hosting Sun’s Network.com operation in a high-density section of SwitchNAP 4 in Las Vegas known as a T-SCIF heat management system (short for Thermal Separate Compartment in Facility). The T-SCIF uses containment systems to fully separate the hot and cold aisles, allowing the Network.com racks to run at 1,500 watts a square foot. See this video for a closer look at the Network.com T-SCIF installation at Switch.

Sun’s Colorado Consolidation Saves Millions

Sun Microsystems is using overhead spot cooling in its new Colorado data center.

How do you squeeze 165,000 square feet of data center infrastructure into a 700 square foot bag? By applying the full gamut of energy efficiency and consolidation technologies at your disposal.  

That’s what Sun Microsystems (JAVA) says it has accomplished in a data center project that consolidated legacy facilities on its former StorageTek campus in Lousiville, Colo. into a cutting-edge site in Broomfield, Colo. In addition to a complete hardware refresh and server virtualization, the company used free cooling, closely-coupled in-rack and rack-top cooling, and flywheel UPS systems to save energy and space.

The payoff: Sun estimates that it will reduce its electricity bill by 1 million kWh a month, for a total annual savings of more than $1million a year. Sun also says that by building a smaller footprint, it saved the equivalent of $4 million in data center construction costs.    

Sun Acquires Q-layer in Cloud Computing Play

In an effort to boost its refocused cloud computing initiative, Sun Microsystems (JAVA) has acquired Q-layer, a Belgian provider that automates the deployment of both public and private clouds. Sun says Q-layer’s technology will help users instantly provision servers, storage, bandwidth and applications. The terms of the deal were not disclosed, as the transaction “is not material to Sun.”

“Q-layer’s technology and expertise will enhance Sun’s offerings, simplifying cloud management and speeding application deployment,” said David Douglas, senior vice president of Cloud Computing and chief sustainability officer, Sun Microsystems

Sun MD Powers China’s Earthquake Readiness

The Sun Modular Data Center (Blackbox) container data center from Sun Microsystems.

A Sun Modular Datacenter (Sun MD) is helping Chinese officials develop an early warning system for earthquakes, hoping to minimize the impact of temblors like the one that devastated Sinchuan province earlier this year. Sun Microsystems (JAVA) donated a Sun MD data center container to the China National Disaster Reduction Center (CNDRC) to develop the system.

The Sun MD integrates the components of a modern data center into a 20-foot shipping container, including servers, storage and built-in cooling. The data center container is portable, and can travel by plane, train or truck. It also allows users to quickly add computing capacity.

The CNDRC has deployed a system of remote sensors that can provide early detection of earthquake activity, similar to systems used by the U.S. Geologic Survey. Chinese engineers are developing a satellite system to collect the data, which could reach hundreds of gigabytes of a day. The Sun MD will provide backup storage for the system, and can also be deployed to manage severe disasters and provide remote support for a disaster control command center.

Will Investors Press Sun to Make a Deal?

Could investors force Sun Microsystems (JAVA) to seek an acquirer or sell off units? That’s not a new speculation, but one that’s examined at length in a Reuters story yesterday, in which investment bankers say that “the challenge of valuing Sun’s intertwined software, hardware and services businesses could put off potential buyers” such as rivals HP, IBM and Dell.

The hook for the Reuters story notes is the news last month that investment firm Southeastern Asset Management has increased its stake in Sun to 21 percent and said in an SEC filing that it ““will have additional conversations with management and/or third parties, regarding opportunities to maximize the value of the company.”

What’s likely to happen? The Reuters analysis concludes that it might be easier to sell of a unit, such as StorageTek, than find an acquirer interested in buying all of Sun. But Reuters also acknowledges that some of its sources are investment bankers who might benefit from asset sales.

Sun Rolls Out Data Center Design Services

Sun Microsystems (JAVA) has joined the growing crowd of companies providing data center design services to help companies improve the energy efficiency of their facilities. Sun today launched consulting services to help customers retrofit existing data centers and design new ones.

Sun is offering the consolidation of its own data center network into a state-of-the-art facility on its Santa Clara campus as a template for the process, which also may feature the use its Sun MD (Blackbox) data center container as a rapid expansion strategy for companies that have run out of space.

Sun is entering a field that has been a key focus for rivals IBM and HP, as well as many established specialists in mission-critical engineering. Data center design/build services have been a central thrust of IBM’s Project Big Green,  which has seen IBM build more than 40 customer data centers around the world. Energy-efficient design was also a driver in HP’s acquisition of EYP Mission Critical Facilities last November.