IBM reportedly in talks to acquire Sequent

IBM reportedly in talks to acquire Sequent

IBM could accelerate its move to the market for highly scalable Intel servers by acquiring hardware maker Sequent Computer Systems.

But there's little reason for IBM to buy Sequent outright to do that, even with rumours of merger talks last week, analysts said.

Instead, IBM could achieve the same result by simply licensing and reselling such technology under a manufacturing agreement with Beaverton, Oregon-based Sequent, analysts said.

"Sequent doesn't have a problem [licensing] its technology to other manufacturers," said Rich Partridge, an analyst at DH Brown Associates in New York. "So I'm not sure why IBM would think the only way to get the technology is to buy Sequent."

Sequent refused to comment on acquisition talks reported in The Wall Street Journal. IBM didn't return calls.

But if such an acquisition is in the works, it's probably being driven by IBM's bid to position itself better in a still-emerging market for very large commercial Intel servers running Unix, Partridge said. The overall market for such high-end servers at $US2.7 billion, according to International Data Corporation (IDC) in Framingham, Massachusetts, is still relatively small.

The $US784 million Sequent has carved a high-end niche for itself by building large servers -- its highest-end system supports 256 processors -- with relatively inexpensive Intel hardware.

Sequent was among the first to announce symmetrical multiprocessing servers back in 1984 and was later among the first to announce servers based on the even more scalable Non-Uniform Memory Access architectures. But the lack of widespread support for its Dynix PTX operating system has hurt its ability to compete in the Unix market.

The Sequent systems, particularly when IA-64 systems start shipping, would give IBM a ready-made high-end Intel platform for running its 64-bit Monterey Unix version when that becomes available by early next year.

Monterey, which is being developed for Intel's IA-64 architecture, merges IBM's AIX Unix with The Santa Cruz Operation's UnixWare and Sequent's Dynix.

"With systems the size of what Sequent's selling, you would expect [end users] are large manufacturers, people running data mines and other high-end applications," said Jim Williamson, an analyst at IDC. "But I doubt it's anyone IBM hasn't worked with at one time or another."

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