Roundup: The Sun-IBM Deal Rumors

What's driving the reported offer by IBM (IBM) to acquire Sun Microsystems (JAVA) for $6.5 billion? We round up the early analysis.

What's driving IBM's reported $6.5 billion offer to acquire Sun Microsystems? There's lots of interesting takes on the deal reports and what they mean. Here are a few:

  • ZDNet's Larry Dignan says an IBM-Sun deal makes sense and is "long overdue." His take: "The companies mesh on the open source software front, Sun is struggling and IBM can consolidate some server market share." 
  • Larry's ZDNet colleague Dana Gardner sees it differently, calling the WSJ report a "trial balloon"  likely floated by Sun itself. "It smacks of desperation in trying to thwart an unwanted acquisition, or to positively impact another deal that Sun is weak in," Dana writes. "If IBM wanted to buy Sun it would have done so years ago, at least on the merits of synergy and technology." Yes, but would Sun time its leak for the same day it's unveiling its long-awaited cloud platform?
  • The Register says a Sun-IBM deal raises "the prospect of a massive consolidation of the software, server and storage markets," and also notes the likelihood of close regulatory scrutiny the deal would face.
  • At GigaOm, Stacey Higginbotham sees the opportunity for cloud collaboration. "The deal makes sense given Sun’s distressed share price, and because both companies appear to be pursuing cloud computing — the next big computing opportunity — in a similar manner." 

  • Sean Kerner at InternetNews is among those viewing the deal through the open source lens. "For Linux, Sun isn't unfriendly - working with Ubuntu/Canonical and others lately, but Solaris is their main operating system push, the way I see it. With Sun as part of IBM, and IBM a major reseller of Linux, the equation changes. Sun would fall into the IBM fold of pro-Linux in a manner similar to how HP today supports Linux."
  • Eric Savitz at Barron's shares some deal notes from Goldman Sachs analyst David Bailey. "While there would undoubtedly be significant cost savings in the hardware divisions of both companies post a potential acquisition, there is also substantial overlap in almost all product lines,” Bailey says. “At the same time, this would increase IBM’s exposure to transactional business, reversing an effort by IBM over the past decade to increase it recurring revenue streams.”
  • Ed Moltzen at ChannelWeb offers 10 Reasons Sun Should Hold Out on IBM.  "Whatever (the price) is, it's not enough and Sun Chairman Scott McNealy and CEO Jonathan Schwartz should hold out for more," Moltzen writes. Is there a higher offer? This seems delusional to me, given that Sun was trading yesterday at $5, making the rumored price a 100% premium.
  • Business Week sees an IBM-Sun combination as a win-win deal. "While computer hardware has steadily become a less important part of IBM's business, Sun is much more than a hardware company. It has been one of the most important Silicon Valley innovation factories of the past two decades—much of it in software. Combining IBM, the innovation leader of the East, with Sun, an innovation leader out West, would yield a formidable player."
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