No IBM deal? Confusion sets in for Sun customers

This was originally posted at ZDNet's Between the Lines.

It appears that Sun Microsystems won't be acquired by IBM, after all. Now the explaining--mostly to customers and shareholders--really begins.

Sun will tell its customers that the IBM deal was just a slight detour and that the company's plan to be a pivotal hardware, cloud-computing, and software provider remains intact. The big question is whether customers will buy Sun's talk--not to mention Sun's gear. For shareholders, Sun has to explain why it split over the IBM offer.

Meanwhile, The Wall Street Journal is reporting that Sun's board is split (Techmeme). CEO Jonathan Schwartz wants the IBM deal. Chairman Scott McNealy doesn't. Guess who wins that one? McNealy, who is dead wrong by the way, will return quips and all and probably bring the company back to its hardware roots. It won't matter. Sun's customers need to know only one thing: Schwartz's strategy (see the stack in the image below)--focusing the company on software--is in flux.

(Credit: Larry Dignan/ZDNet)

Given reports that Sun had been shopping itself around and could find only IBM as a suitor, there's a decent chance that the company will remain independent for a bit. However, any customer buying from Sun will have to consider the ramifications of a purchase. For instance, if you're about to buy Sun hardware and Hewlett-Packard is in the running, why wouldn't you opt for the latter just to eliminate some uncertainty? After all, HP could buy Sun. What about cloud services? Will you trust your cloud to a company that has a tug-of-war under way over a buyout?

Look for Dell, IBM, and any other Sun rival to pounce into the fear, uncertainty, and doubt game. In the grand scheme of things, Sun was small potatoes for IBM. For Sun, the failure of the IBM-Sun talks was huge.

Every question about Sun will come back to the company's future plans. Do you buy Sun's road map five years out? Do you assume that Sun's cloud services will ultimately be absorbed elsewhere?

Given recent events, a tech buyer would be foolish not to incorporate Sun's future owner--and management--into any buying plans and use the IBM flap as leverage.

[mikestatic1]

What has IBM done to make them appear as "The Answer"? They couldn't even keep their own PC unit profitable with all of the brand recognition and image behind it. They are a joke.

[jgronline]

IBM and Sun would have gone together like HP and Compaq but only worse. It was a bad idea and I'm glad it didn't work out.

[meh130]

HP's acquisition of Compaq worked out very well. HP's big weakness was in x86 computing and storage, and Compaq gave HP the C-Class blade server and the EVA storage system, which HP needed with the end of life of the MPE minicomputer and the decline of HP-UX systems.

HP's acquisition of Compaq, and its leadership in x86 systems, has put IBM between a rock and a hard place. HP's popular blade servers and Dell's cheap rack mount servers. IBM needs something to shore up its position in the x86 server market.

I think IBM was interested in Sun for three reasons: Java and MySQL for sure, but also for Sun's well engineered, but not so popular, x86 systems. I think IBM feels a better product, combined with IBM's channel, could help them win against HP and Dell.

[db2not]

I don't think IBM ever pursued that deal in good faith, it appears they just wanted to create more skepticism about Sun. Sun is better off without IBM, IBM is run by Scums.

[Arrgster]

kind of reminds me of the Microsoft - yahoo fiasco....

[EcuadorHomesOnline]

Interesting comparison. The MS/Yahoo deal would have made a much bigger impact on Microsoft than the IBM/SUN deal would have on IBM. I think that Microsoft is VERY HAPPY that thier deal eventually fell through, Yahoo just isn't worth that much in the long run. The price for SUN seems to be more fair, but this deal isn't about price.

[supoman]

Sun should be very hesitant. IBM is not the best company at marketing it's products......OK who am I fooling. THEY'RE TERRIBLE!!!! That deal would be the death of Sun!!

[dcase99]

Sun is in it's death throws anyway, with or without IBM, SUN is no more

[Cartel1]

The best news I've heard for a long time. I think Schwartz needs to be replaced for his poor judgment in putting Sun and its shareholders through this pickle. I know the company was losing money but I really think their open source and cloud offering especially during this period of global recession would really turn the company around, especially seeing where he started his CEO blog outlining to customers and partners the future direction of Sun. He lied about that, as he at no time mentioned that he wanted to sell off Sun (n.b. I know he couldn't make that announcement anyway, but he's still a liar).

Get rid of Schwartz!! You can't trust his words nor his judgment.

Long live Sun.

[tundraboy]

Apparently there are still a lot of people who haven't noticed that Sun has been in a death spiral these last few years. Like Jerry Yang, Scott McNealy is too emotionally invested in the company to be an objective decision maker.

You had the BUNCH, then there was Digital, and then SGI. Sun fits nicely at the end of that list of failed makers of (mostly) midrange sized computers. IBM was the best deal Sun could ever get. Or, they could wait a few more years and get the same $25 Million that SGI went for recently.

[sanenazok]

I was hoping that the deal with IBM would finally allow Sun to monetize Java. Right now their big license is to Bluray and some car manufacturers. IBM would sell a copy with every server. The midsize computing market is going to be gone in the next 5 years. Mid-range computing will move to the cloud running on large farms of small computers aka Google. Sun would have been a good feature for IBM, now it will have to work hard to avoid becoming Silicon Graphics.

[zvonr]

The reality is that we have no clue what the heck is going on, all we have is some unconfirmed rumors. Maybe Sun broke of the IBM talks because somebody else came in with a better offer. I would really like to know who was leaking the info and what was its agenda...

[TV James]

This was just the Microsoft-Yahoo! play all over again, right? Pretend to be gearing up to buy a competitor. Then back out at the last minute and the one left at the altar looks worse than before it stood next to the cad, all blushing and beaming at finally being picked.

If it's not too late, try to fade out gracefully, Sun. (Or hook up with Silicon Graphics... hear it's been standing on a street corner trying to pick up a lousy $25m.)

[scdecade]

Now what? I hope Sun's management and board of directors have a really good explanation. Sun needs to announce a new strategy and a new management team. If the best the current team could do was attempt to sell themselves to their main competitor then it's time for a change. How could this same group of people be entrusted to run the company going forward? No way. What's transpired with regards to this proposed acquisition certainly seems like Sun was a willing participant in their own pump-and-dump. IBM has added bold, underline, and italics to the large question mark over the future of Sun. Sun's BOD would appear to have absolutely zero bargaining position from which to reject an offer. Seriously, Sun's BOD is already the lamest pack of nincompoops known.

Sun needs an outsider as CEO. Something is being lost in translation between the IT marketplace and Sun's decision making. An insider who's drank the same Kook Aid as McNeilly as Shwarz doesn't seem likely to have the requisite fresh perspective. When McNeilly and now Shwarz speak about the success of their initiatives they always speak in nebulous terms, i.e. 'downloads' or 'mindshare' or technical minutia, and never in terms of dollars and cents. Sun needs an actual businessperson in charge.

[asi7]

> Now the explaining--mostly to customers and shareholders--really begins.

"We do not comment on rumors or speculation"