The Impact of the Acquisition of Sun by IBM, According to 3Par

"From a defensive point of view, an acquisition prevents another player from snatching up the market share Sun customers represent and gaining the opportunity to accompany those customers into a new era of computing centered on virtualization and utility, or cloud, computing.

"Many Sun customers were already resigned to moving off Sun hardware and software to other platforms eventually. IBM would have pre-emptive access to that ready-to-move base, and could hopefully keep them from going down a non-IBM route. Just the service revenue potential to IBM could be substantial; there would be an enormous annuity business in selling services to Sun’s installed base and IBM is no stranger to service-based profits, with a bulk of its revenues coming from services. After HP acquired EDS, and with Cisco announcing its intention to enter the server market, the land grab is on.

"Offensively as well, the acquisition would give IBM more weapons with which to win the "battle of the cloud." Java, for example, is an established enabler for cloud computing and a jewel IBM may be able to leverage and monetize better than Sun. But there is even more behind the decision to look into this acquisition. The large, but humbled, IT giant controls another jewel in the rough, StorageTek (STK). If the two were to become one, IBM would be able to sell its entire online storage line-up to the STK (now Sun) installed base, which is not insignificant.

"Before it could get to this stage however, IBM would have to streamline its online storage portfolio because even right now, the two vendors both sport a large and confusing range of platforms, many of which are OEMd. Some of these OEMs would be losers if the acquisition went ahead. For example, if IBM were to discontinue Sun’s relationship with Hitachi, Hitachi sales would indeed suffer, though both HDS and EMC would stand a good chance to pick up customers unwilling to move to IBM’s traditionally disappointing high-end storage offerings.

"Rationalisation would also affect the server side, with either Solaris or AIX users potentially disappointed if the two operating systems were reduced to one. On the other hand, whichever direction the rationalisation went, Solaris users would gain a roadmap and a support path backed by one of the biggest IT companies in the world. HP however would certainly try to pick up anyone feeling alienated, with promises of company and product stability and reliability. With an acquisition, IBM would control Sun’s MySQL database, along with IBM’s own DB2, all of which Oracle would probably be unhappy to see under an even bigger, combined roof.

"At a more internal level the vendor would need to manage the possible culture clash very carefully, sensitively and successfully in order to retain the engineering talent and vision that would come with Sun and that it would pay dearly for. The coming together of two established companies can often be a substantial challenge and can have a deep impact on the ultimate success of the merger.

"One thing is certain: if and when it happens, this acquisition will create ripples across all links of the IT industry chain, from the strength big blue would gain from the Java, STK, and MySQL portfolio, to the issues end users might be faced with should the Sun OEM relationship with Hitachi meet an early demise.