Ashlee Vance and Steve Lohr at the New York Times reported that I.B.M. Withdraws $7 Billion Offer for Sun Microsystems: “On Sunday, I.B.M.’s board decided to withdraw the offer.” Read the article for (sketchy) details.
Is this good or bad? For those of us who didn’t think the acquisition was in the best interest of Sun’s products and communities its positive, but regardless the article rightly quotes: “Sun is now sort of damaged goods,” Peter Falvey, the co-founder of Revolution Partners, a technology-focused investment bank
Damaged goods indeed. Whatever Sun says or does, we know it doesn’t believe in itself and has, in my mind, simply given up. Even if this isn’t the case, Sun’s going to spend a lot of time, energy and money convincing customers that its committed. Sun made a big gamble and they blew it.
Will Cisco rocket into the server business by picking up the broken pieces? Who knows. All eyes will no doubt be on JAVA shares to free-fall on the market open Monday morning.
I will say, if Sun has to be acquired, just please please please don’t let it be HP. 
Additional Thought:
I rarely intend to come off as negative but some times I do… let me propose an alternative reason for Sun’s desire for acquisition.
Many of us believe that if Sun really wants to grow its going to have to radically reorganize, to become lean and mean. This would make its slow, painful, and frequent RIF’s look like a pregame show. It is possible that Sun’s executives hope to avoid these radical cuts through acquisition by a larger entity that can absorb the workforce in order to save as many products and personnel as possible. That is an honorable possibility.
The whole thing bums me out. I have always liked Sun hardware, and now with the 7000 series storage appliances and whatever they are releasing on the 14th (I am guessing crossbow based virtual network appliance) I feel like Sun has some new and interesting products to take back lost market share. I don’t think I will be satisfied with ANY acquisition deal that may occur.
You really have to wonder what outcome is worse: acquisition or failed acquisition.
But the thought that IBM might have “absorbed” the workforce of SUN seems a little naive to me.
OK, you could have let go all of accounting, marketing and sales (and HR…) – but has anyone heard of a m&a where this actually happened?
It looks to me like IBM is trying to destabilise Sun. If you think about it IBM has just severely damaged one of its biggest competitors regardless of whether they make the purchase or not
What would be your opinion on possible acquisition by Apple? Does it make sense?
Sun desperately needs to simplify. It needs just six product streams.
Systems (Sparc & x64), Storage (HDS & Open Storage), Networking (Infiniband and Crossbow based) all supported by Solaris.
Then Database (MySQL), Application (Glassfish portfolio, Netbeans, JCAPs, Java) & Identity.
If it’s not in this list then it gets punted (sold off or turned into a subsidiary for the interim), This includes SunRay, OpenOffice, SSGD, Messaging, Calendar. Get rid of a bunch of the Sun Labs projects which don’t directly support the future of the core six product streams.
Sun needs to get serious about it’s place in the world and that place is at the heart of the data centre providing core infrastructure.
Its bad for the share holders – but good for the user base.
As a user base we get to keep all our favourite products which the chance that they will become FOSS.
Its going to take some good pr and clear leadership to repair the damage IBM has done, which SUN lacks both.
I would not go as far as john says, as I use most of those apps, but SUN must become a systems provider. Not a collection of cool stuff.
I work for a Sun partner and the reality is that Sun has lost its way, and probably did so some time ago. I absolutely agree that Sun has a great product portfolio. Open Storage is opening doors previously wedged closed by EMC and NetApp. It’s Nehalem boxes will be at least as good as the competition and it’s T series CMT kit is still hot. It’s got an extensive software portfolio almost all of which is open source.
But here’s the thing. Sun doesn’t know how to sell it. Ever asked a Sun employee to talk to you about GlassFish? Cue tumbleweed. Cloud? Same. Internally Sun has virtually no real marketing budget outside of soft dollar programmes and can have the best products in the market. But if noone hears about it….
Sun has admireably open source aspirations but it’s still a hardware business with an associated cost base and the confused focus is killing it. If this proposed acquisition is dead in the water I don’t know where Sun is going to go. Same way as the negotiations is my guess. Not immediately, but I think it’s blown it.
As an OpenSolaris user it is a very good thing for me. I understand that SUN must make money, but I feel it is time now to capitalize on its vast portfolio. How? I think they could co-operate with Dell & HP and sell systems pre-installed with OpenSolaris, netbooks, laptops desktops, workstations. They also sell workstations. I think they should revive gPC all over the world + 50Euros for OpenSolaris pre-installed. They could also sell OpenSolaris as a boxed product for 50Euros and as a free download (like SUSE), they can sell Atom systems preinstalled at the same price. Why not?
Well, Sun can’t sell hardware boxes forever. Unless Sun can find a way to monetize their software……..
Its telling – the only ‘support’ I’ve seen for Sun has been around Solaris & Java – neither of which makes enough money to justify a $7Bn valuation.
Its a shame, but Sun are heading the way of SGI – they are both vendors of ‘cool’ tech that no-one actually buys.
At least the stock is still higher than before the rumors…
So maybe the shareholders now learned to see more value in Sun….
The problem for Sun is that Intel multi-core CPUs have caught up to SPARC. Can Sun make a living selling Solaris x86 ?
Without too much thought going into it why not let DELL buy them? I don’t think they have too many competing areas and DELL also needs some help to continue growing and challenge both HP and IBM. DELL also are very good at logistics and certainly know how to market their stuff. Perhaps their combined engineering and manufacturing could create the some great servers with a decent pricetag. And expose the normal DELL customers to SUN hardware and vice versa.
But probably too big difference between the cultures in both companies.
-J
if they think they can make money off sparc, spin it off to a start up separate to sun, then once that is out of the way partner 50/50 with intel.
it’d be too good to be true, all the major software houses would jump on board.
@Dan
“Can Sun make a living selling Solaris x86″
if Microsoft can by selling an inferior product then why not?
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