If IBM buys Sun, expect clouds in the forecast

The heavily rumoured acquisition of Sun Microsystems Inc. could fast-track IBM Corp.’s goal of becoming the “General Electric of the cloud computing,” says industry observer Charles King.

Recent initiatives such as Sun Cloud and Open Cloud Platform will fit in nicely with IBM’s need to offer flexible, on-demand cloud services, the principal analyst with Pund-IT Research Inc. said.

“These assets can be integrated into IBM’s own cloud efforts fairly easily,” King added. The move might also be a key step in heading toward the platform and infrastructure-as-a-service model that IBM needs to dominate the private cloud market.

Habeel Gazi, research analyst with Info-Tech Research Group Ltd., agreed with King on the cloud computing driver, but added that one of the most valuable aspects of the deal could be Sun’s software assets. Acquiring Sun’s crown-jewel Java programming language would give IBM control of a platform that runs many crucial applications and could actually support IBM’s cloud push.

“With Java, there’s some possibility of taking it to the next level and really driving this move to the clouds,” he said.

Sun’s experience in providing secure private clouds, Gazi added, will definitely help IBM in its cloud computing race with Microsoft Corp., Amazon.com Inc. and the newly signed partnership between EMC Corp., VMware Inc. and Cisco Systems Inc.

Crawford Del Prete, executive-president of worldwide research at IDC Corp., said that while the potential deal is complex and is hard to justify on the merits of hardware overlap, Java’s strong foothold in the client space — such as PCs, operating systems, and cell phones — makes the deal very appealing for Big Blue.

“When you look at IBM’s vision of a ‘connected planet,’ this will include all kinds of new appliances that will likely run on Java,” he said.

Sun’s history of taking chances on technology and thinking out-of-the-box has given them the reputation of an innovative company that sometimes has difficulty monetizing its ambitious plans.

According to King, while Java has been hugely popular and influential, Sun’s one failure has been its inability to truly cash in on the platform. “And ultimately, it’s all about dollars and cents,” he added.

Del Prete said that the key to fully unlocking the value of technologies like Java can only occur through services engagements.

“If you want a next-generation energy company to use Java-enabled devices to create a smart grid, you don’t sell Java,” he said. “You sell the business value of a smart grid. This is what IBM Global Services does. It drags through technology.”

The financial terms of the potential deal, which has been rumoured US$6.5 billion, could be labeled a steal, according to King — especially consider Sun has about $2 billion in cash and short term assets.

“That helps negate some of the purchase price up front and Sun is a company that does about $12 billion a year in business, too,” he said. “Compare that to the $10-billion-plus that HP paid for EDS and I think you can see the opportunity this gives IBM for an immediate return on investment and useful assets.”

And when you look at the four biggest U.S.-based systems vendors, King said, IBM and Sun are the only two fully focused on the enterprise.

“(IBM and Sun) do business among medium and small businesses, but they don’t have the broad consumer desktop-to-enterprise-data-centre focus that HP and Dell has,” he said. “The strong focus on enterprise solutions might be a very good thing indeed.”

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Related Tech News

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Featured Reads