Ever since the popping of the dot com bubble, Sun has been trying to redefine itself. At core, Sun has always been a hardware company –- initially CADCAM workstations, and then thanks to purchase of part of Cray Computing’s assets –- a server company. That was fine when Windows couldn’t provide the scale required for the running websites, and before clustered Linux blades proved the viability of low cost/no cost, eating Sun’s lunch. Sun had Java, but ceded the business and much of development tooling standards to IBM before the web development market fragmented with new, popular scripting languages.
So what should sun do when it grows up? Back in 2003, we suggested Sun eat its young in classic Silicon Valley fashion: junk the software business, where it has never made money, and bite the bullet on Unix staking a new line in the sand for 64-bit Linux. A lot of our friends at Sun stopped returning calls and emails after that. Had Sun done so, it would have enjoyed a 2 – 3 year head start, of course at the price of transitioning to a higher volume, lower margin business model for which it is now still struggling with.
Fast forward to the present, and Sun is several years into a strategy to become an open source company. Fine idea had it begun prior to Jonathan Schwartz’s watch. But Sun’s boldest move of recent, buying MySQL for a billion dollars, was great for grabbing attention, but was hardly a game-changer in that this little database-that-could could not carry a $5 billion overall business (it would have made more sense a couple years earlier had Sun already been well underway down a Linux road, which it wasn’t).
So what does IBM really have to gain from spending $6.5 billion? More share in UNIX servers? UNIX is not exactly a growing market these days. With Linux eating UNIX’s lunch, IBM has been already quite busy, thank you, pushing the middleware and management systems that do make money atop Linux, which doesn’t. Sun still has $3 billion cash stashed away from the glory days that it’s burning through. IBM has $13 billion, and healthy margins to boot, so why bother? Migration of the tiny base of NetBeans users to Eclipse? Sorry, that bird’s already flown. A land office market in MySQL (when IBM already has stakes in the more scalable EnterpriseDB)?
One could posit that this is a circling of the wagons following Cisco’s announcement of its Unified Computing systems initiative; however, Sun does not offer any of the missing networking pieces for IBM to respond to Cisco. It could also be interpreted as a move to blunt HP by adding more data center share – except that IBM already has the heft to counter HP and doesn’t need Sun’s incremental presence.
It’s also been speculated that IBM might pick up Sun and divest portions, such as the Solaris business to Fujitsu, as piece parts. But the question is, what family jewels are actually left?
Sun has been approaching various suitors over the past few months as it requires an exit strategy. But Sun will be a waste of IBM’s money, not to mention the time spent digesting a large acquisition of questionable added value. That leaves Fujitsu, Sun’s primary Solaris OEM, as the only logical suitor left standing.
Update: Progress Software’s Eric Newcomer, whose “night job” is co-chair of the OSGi Enterprise Expert group, has some interesting observations on what it’s been like to have been caught in the middle of the Eclipse vs. NetBeans battle.