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IBM broke off Sun acquisition talks

Posted by fabriziogiudici on April 5, 2009 at 5:30 PM PDT

According to Reuters, IBM withdrew its buy offer for Sun. It's not clear whether the deal broke forever or talks could resume, neither whether there are other possible buyers. We have to get patient on this issue.


The Register is speculating that this is due to a rift in the Sun board between the Schwartz and the McNealy factions. This means that Schwartz is probably on his way out: Say what you will about Schwartz, but at the very least, he put together a coherent strategy for Sun, as opposed to the complacency that McNealy brought to the job. McNealy held off on open sourcing Java, and was rather timid at reorienting Sun as a software and services company.

Thank God it didn't happen. What a relief! I say. I hope this deal never sees the light, for the Java community sake, and for all the great things that Sun makes sake. I want to take this opportunity to make a plea to Sun's board: Please don't sell Sun short, give it a year or so, and let Sun completes this process of reinventing itself one more time. I truly believe that Sun has a very good chance of pulling it off, and hitting it big again just like they did in during the internet boom. This time though salvation will come in two words: Cloud Computing. Here's why. Sun has been having a really tough time figuring out a successful business model to capitalize on their valuable open source software assets. The traditional support license model only works in a limited fashion, and especially not for companies as large as Sun. But open source, and Cloud Computing offer the perfect combination for a successful business strategy. On one hand you have the economy of scale as far as development costs, and on the other hand you have the economy of scale as far competitive pricing, and value addition. In addition Sun has the best stack there is for an exceptional cloud computing platform, from storage, all the way up to the app server. All they need is to execute, provide cloud solution services, and more importantly partner with some of the cloud providers out there.

I don't know. These things are so far from our engineering perceptions that, while in the short-term I'm relieved to see IBM stepping out, I really can't tell, for instance, whether this step makes Sun weaker or stronger, whether there are less or more chances to have other, more friendly buyers, or whether in the end Sun will have to return to IBM and accept even tougher conditions... Let's keep an eye on it, and in the meantime just work as usual.

Best news... ever. :) Now let me tell you a super-duper secret conspiracy. Sun didn't want to sell, they just brought IBM to "talk" (and leaked it) so the market would see that Sun is worth much more - even in the current economy, even with Sun's current performance - than their previous $4/share. ;-) If JAVA drops from $8.49 back to $4 when the market opens today, it's just more evidence that the financial world is run by retards (and hey, guess why we are in the middle of this stupid economic blackhole?...) I hope that either (a) Sun finds a better buyer (Cisco, Google, whatever company that won't destroy half of their tech), or preferably (b) this sellout failure will give Sun enough time to start showing sufficiently strong results to validate the startegy that they bet the soul in the last few years (open source everything, new innovative product lines based on Solaris 10 and Niagara foundations like Fishworks', etc.)