The high-tech rumor mill churned at high speed Wednesday as industry watchers debated the good, the bad and the ugly about a potential pairing of IBM and Sun, if Big Blue does indeed acquire its long-time rival.
IBM and Sun compete in many markets, such as servers, virtualization and cloud computing. But while IBM excels, Sun continues to fall short -- making it a candidate for an untimely death or an opportunistic acquisition, according to analysts.
"If this deal is for real, this would be the most graceful way for Sun to exit the market -- particularly since C-teams are cutting back on the number of IT suppliers they have to deal with," says Jasmine Noel, a principal analyst at Ptak, Noel & Associates.
For Sun, an acquisition could put an end to speculation that the server vendor is going out of business. But at the same time, an IBM buyout could burden Big Blue with too many overlapping products and would worry Sun customers about the future of their much-loved products.
"Sun is in trouble, without doubt, and with a strong cash reserve it is a very attractive takeover target for any large organization that can afford them," says Andi Mann, research director at Enterprise Management Associates. "For IBM, it is a questionable move. It definitely makes sense in some areas, but there are problems here too -- most specifically, all the product overlap."
For instance, IBM and Sun both develop Unix operating systems (AIX and Solaris), as well as open source operating systems with Linux and OpenSolaris. They both deliver databases with IBM's DB2 and Sun's MySQL, and perhaps the most obvious product duplication, the two vendors' respective server and storage portfolios. Other overlap exists with virtualization, e-mail and collaboration servers, developer tools, security and productivity applications, and to a lesser extent, management software, Mann says.
Mann says loyal Sun customers, in particular Solaris customers, might witness the products they most like become "at best, marginalized in the IBM sales machine and at worst, unceremoniously dumped." Without a commitment from IBM to put its considerable strength behind Sun products, customers would have to be concerned about the future of their current Sun investments if a deal is in the works.
"IBM would be cannibalizing its own (mostly) profitable business lines with a whole raft of second-tier and open source solutions," Mann says. "I think this would be absolutely awful news for Sun and its customers."