Submitted by We’ve been following the recent news about IBM potentially buying Sun, and the internet had more or less accepted that big blue was going to be the new owners of Sun Microsystems. However, the omnipresent “people close to the matter” have told the New York Times that IBM has withdrawn its offer, and that the deal is now off.
The New York Times draws its information from three people close to the matter, who wish to remain anonymous because information about the negotiations is confidential. IBM had a team of 100 lawyers looking over the negotiations, and after their research into all the possible issues that could arise, IBM lowered its bid from USD 9.55 per share to USD 9.40. Sun’s board did not reject this offer, but did ask for certain guarantees that IBM thought were “onerous”.
One of the reasons IBM backed out has to do with the change in control contracts with Sun people higher up in the chain (they’re never about normal employees, are they?). IBM found that the payments to high Sun people were higher and more extensive than it had anticipated.
Now that the deal is off (assuming the NYT’s sources are correct), Sun is free to enter negotiations with other parties, such as Hewlett-Packard and Cisco.
It’s never a good sign when a company fails due diligence, and given that Sun has decided it needs to sell itself it’s difficult to see where they go from here. You know the end is nigh when executives are holding out to pull the rip cord on their golden parachutes.
I suppose given the unrequited love that Sun people seem to have for Apple then they would love Apple to come in for them, but that’s not going to happen.
Especially since Apple got Sun’s ZFS and Dtrace for free already.
And Java and OpenOffice and MySQL. And they gave away Sparc, as well. Exactly what *does* Sun own? A bunch of people who would likely walk the day after Sun was sold.
Would they really walk? Considering the market conditions, keeping any job you have would seem smart.
Then it may be that the people are the one thing that Sun still *owns*. Slave auction, anyone?
Edited 2009-04-06 01:29 UTC
I hear Apple needs more developers for it’s OS division. They must be quite busy with the desktop and mobile versions of OS X. And they could probably use Sun’s expertise to improve their server edition.
Not to mention the fact that their browser and OS are so trivial to crack. They could use some help there.
Edited 2009-04-06 02:36 UTC
Yeah sure, the first release of Solaris 10 was vulnerable to ping of death and you could connect root with telnet without password.
I am sure it will help Mac OS X to be more secured …
You’ve gotta be kidding…
http://www.osnews.com/story/17240/Easy_Solaris_10_Telnet_Exploit_Fo…
http://synfulpacket.blogspot.com/2007/01/solaris-10-ping-of-death.h…
I think the biggest sin is their ability to purchase stuff and never integrate it into a larger strategy for their customers. Everything they own seems to hanging in random locations with no attempt to provide a counter to what Microsoft has to offer by the way of an end to end solution.
There are open source projects out there that do what Microsoft’s line up can do but there is no company bringing these together and providing an out of the box solution. There is nothing stopping Sun from brining those projects under a umbrella and selling it as part of a larger strategy.
Its depressing given that there are executives who are paid many hundreds of thousands at Sun who seem to be denser than I am; really, if someone is getting paid more than someone like me or many other people on this website – we expect them to be monumentally smarter and savvy than most of us – and yet we seem to be the only ones on this forum who actually realise the faults with Sun.
A bunch of costumers buying their hardware and services?
Why would costumers need Sun’s hardware and services?
Why would customers need the hardware and services of ANY vendor?
Ain’t loaded questions fun?
Because the customers apparently believe that they need them, I would suppose.
But this sub-thread is not about customers. It is about costumers. And I should think that they would be more concerned with proper color, lighting, and makeup than with Sun’s offerings.
“But this sub-thread is not about customers. It is about costumers”
Huh? Dude, you lost me right there. What the heck are you talking about?
Aliquis claims that Sun’s software and services are popular with costumers and I am wondering why that would be.
http://www.osnews.com/thread?357328
Edited 2009-04-06 15:25 UTC
Because they’re firmly entrenched, or required to by government offices to which they sub-contract.
Kinda of funny since, when Apple was down it was hoped Sun would buy out Apple back in early 90s.
Sun’s inability to cut costs and drive prices down to compete was the failure. Their egos believed somehow customers were willing to pony up premium sales price while the competition was cutting their prices and staying afloat. This is the classic failure story of silicon valley. They are produce deflationary products. Next years model is faster better and sells for less.
And I suspect that many average guy investors would like to give them a golden shower right about now.
Due Diligence? These were informal talks at best, nothing even remotely resembling a due diligence process.
The talks broke off because SUN thought IBM was low balling them. Yo could try reading the article for a change… Jeez.
IBM was already in the process of conducting due diligence with Sun. As far as IBM were concerned, they failed that process and Sun didn’t like the resolution. Due diligence is a process where a company assesses another for potential acquisition, and they were very much at that stage. I don’t know what you have been reading but this was an awful lot more than informal talks, and binding agreements were already in place as to what would happen.
No, the talks failed because, from what limited information we have from TFA, IBM was hesitant to guarantee the golden parachutes that Sun’s execs wanted (change of control) and why they made a lower offer – which Sun wanted to reject. Have you read the article or even the summary, or heaven forbid, anything that has surrounded this whole bit of news?
From the very article above:
Ergo, Sun really wanted this to happen whilst securing suitable compensation for various execs.
Does that sound like informal talks to you? There you go, you’ve just been spoon fed what has actually went on.
It wouldn’t be so bad if you got things wrong, but throwing your weight around accusing other people of being wrong when you’re as thick as two short planks who can’t read yourself is not a great thing to be doing.
I love the sound of Cisco Solaris, Cisco Star Office, Cisco Java, Cisco Virtualbox, Cisco MySQL, Cisco Blade, Cisco Fire, and Cisco UltraSPARC CPU’s.
But – as I’ve been saying for the past five years – Sun really needs a strategic partnership with Novell. Neither Sun nor Novell has had all the pieces to the puzzle in the enterprise and neither has the resources to do it alone. The two of them have all the pieces to the puzzle and can actually form a real strategic, long term marketing game plan. IBM on the otherhand never really needed anything Sun had to offer.
The sounds of Sun-SuSE Netware, Sun-SuSE Open Solaris, Sun-SuSE Open Desktop, Sun-SuSE ZENworks, Sun-SuSE Groupwise, Sun-SuSE AppArmor, Sun-SuSE BorderManager, Sun-SuSE Star Office, Sun-SuSE Evolution, Sun-SuSE Java, Sun-SuSE Virtualbox, Sun-SuSE MySQL, Sun-SuSE iFolder, Sun-SuSE Blade, Sun-SuSE Fire, and Sun-SuSE UltraSPARC CPU’s are just as interesting to me.
Edited 2009-04-06 05:29 UTC
Sun Suse? Suse is in bed with Microsoft so that isn’t going to happen.
Let’s not forget IBM itself kisses Microsoft rear an awful lot as well. I don’t see IBM setting up it’s employees with Linux or Apple laptops, to run IBM software. Upper Management still doesn’t know about anything but Microsoft.
FYI, IBM does setup employees with Linux laptops running IBM software. This is called the IBM Open Client. There is a mainstream version that tracks with RHEL, at present version 5.3, as well as a Debian/Ubuntu Version built for Ubuntu 8.04/8.10 (Called OCDC–Open Client Debian Community). In the very near future IBMers will receive laptops that are dual boot out of the box. Right now an employee simply downloads the recovery disk to install Linux. Regarding Apple laptops, my intern uses an Apple Macbook Pro laptop provided by IBM.
I personally have 5 Linux machines at my desk at work and zero Windows machines. I run Lotus Notes, Lotus Sametime, Lotus Sametime 3D, SecondLife, OpenSimulator, Rational Software Architect, Eclipse, and Data Studio all on Linux.
CISCO makes total sense. In fact I am willing to bet they are the ones SUN is really pushing hard for merger.
SUSE or NOVELL are marginal at best, and they have their own issues. They are not in the same league as SUN by a looooooooooooong shot.
Eh? Suse *is* Novell.
I (almost) totally agree with this statement. Not only because of the pieces of the puzzle you mention, but also because of the business focus of both companies. I can see their boards getting along fine with each other.
But it will only happen if Sun can somehow split itself in a SW and HW part, because I simply fail to see how Novell might benefit from Sun’s HW business. And such a split will only happen if Fujitsu can somehow be interested in Sun’s HW assets (and perhaps the Solaris part as well).
Fujitsu is awfully quiet lately, btw…
I can’t help thinking that there is a pretty good complementary fit and potential for synergy between Apple and Sun Microsystems if Steve wanted to go into the high end server market. Considering that Sun is dirt cheap right now with a market cap under 7 Billion and Apple has 25 Billion in the bank. Sun’s technology alone is worth that money not to mention their high end customer base which is difficult for Apple to crack alone.
1. Both companies have great software and hardware.
2. Both companies have a processor design group.
3. Sun does high end servers while Apple does everything else.
4. Apple already plans to integrate Sun’s ZFS.
5. NeXT Step ran on on Sun OS at one point.
Who knows, may be Eric Schmidt can advise Steve and help pull it off.
The question is: Is there money to be made by Apple in the high end server market? I think the answer is yes. Apple could invest and enhance all of Sun’s products and become a force in the high end server market. Apple is very well positioned in the industry to weather the recession and perhaps it is time for Apple to seize the moment and be bold.
Just imagine “powerful and reliable high end servers that are easy to use” from Apple/Sun. Imagine Cocoa/WebObjects running on top of enhanced version of OS X / Solaris with Java integrated for application development or imagine Sun server technologies trickling down to OS X servers.
Apple would be the only company that truly covers all scales of computing with it’s own hardware and software. From wearable iPods, to handhelds, laptops, desktops, low end and high end servers.
Time will tell.
Openstep did run on top of the Solaris Kernel/Filesystem. NeXTSTEP 3.2 ran on top of IBM hardware but was faster than AIX so they put an emulation layer for NS 3.2 to run on top of IBM hardware thus making sure IBM didn’t license NS and effectively kill AIX. That was one piece of company [NeXT] history I always found truly pathetic on IBM’s part.
Openstep was ported to Solaris to be thee Desktop/Development Environment. Even Terminal.app was Openstep certified in ObjC/Cocoa [today’s terms]. The political squabbling over who gets what percentage of sale for Hardware/OS and which drove the sale [Hardware or OS] destroyed that relationship.
Both camps sabotaged the Openstep future between respective companies.
If there were a merger I highly doubt Schwartz would survive. He was not well liked at NeXT while he ran Lighthouse Design.
Can you provide some links to where NS was running natively on IBM HW faster than AIX?
It didn’t. NeXTSTEP ran on four hardware platforms:
NeXT (68k-based)
SPARC
HP PA-RISC
x86 (pretty limited hardware support)
NeXT did release a desktop environment (OpenSTEP) that ran on top of X-SPARC and MS Windows NT, but it never really caught on.
http://en.wikipedia.org/wiki/OpenStep
This was all heavily re-tooled and became what is now Mac OS X.
It did, but you definitely didn’t work at NeXT to see it run.
How can I show you NS 3.2 running on AIX when IBM bought the license for NS paid to have it ported to run on their hardware and upon seeing it before the CEO made the choice buried the project above a interpreted layer so it would never become official for public consumption?
That was the whole point. At least the $25 Million for Openstep on Solaris was money well spent and there was some good work that came out of the project.
You’d have to have worked there to be privileged to the NDA information. Seeing as it’s been well over 15 years since that ended, it’s no longer under NDA.
Ahh, the good old days of NEO, Solaris PPC, Openstep, IBM money, Sun and ego’s. A book that will never be written. Funny, history repeats or “Same as it ever was”.
—Bob
that’s not the way apple works. they’ll probably try to hire suns engineers and grow organically instead of buying a dying company. apple doesn’t really need sun, their enterprise strategy doesn’t look like they are hell bound to get into that market anyway and enterprise isn’t the place to make a good profit by selling hardware. ibm learned that lesson, sold most of their hardware business and moved on to services.
on the other hand, maybe apple is just to successful to go on with it’s rather conservative strategy and should use their war chest and expand more aggressively.
Huh? Enterprise is the best place to make money off HW since vendors can afford higher profit margins.
IBM got out of the commodity/personal computer business. They still make plenty of servers and mainframes, where they have higher profit margins. In fact IBM, depending on the quarter, has sometimes surpassed HP’s volume in the datacenter/server segment.
Seriously, do some of the posters in this site even know what they are talking about? Or is this just a massive center where kiddies can play arm chair CEO from their parents’ basement?
can they? i would suspect that profit margin in the commodity x86-server-market is much lower than the +30% apple is used to.
that’s why i wrote “most”. ibm is only selling half as much hardware as they were selling ten years ago. their server business is stable but isn’t growing.
about $ 5-6 billion with 35% market share. but at which margins? ibm doesn’t really break up the numbers, but they say that the power-servers have a much higher margin than the x86-servers. and ibm only sold unix servers for $ 6.4 billion last year, which should be the bulk of their power-servers. so the majority of its server business seems to be commodity hardware or at least has to compete with it and there isn’t much money to be earned in that sector.
if you don’t understand a posting, it doesn’t always mean that the poster is dumb.
sun sold unix-servers for $4.8 billion in 2008. i don’t know how much is sparc and how much is x86, but i remember that sun deliberately sold their x86-servers at a loss to win market share. and their sparc-business doesn’t seem to go anywhere. in apples place, at least suns hardware business wouldn’t be a good reason to buy them.
You’re probably right. There is always the not-invented-here-syndrome. Also, while Solaris has enterprise features that Apple could use, they have a lot of extra baggage that Apple would not be interested in.
Apple will likely continue to enhance its platform in house. ZFS was a big win for Apple. Steady as she goes.
Time will tell.
Plus Sun has developed the Most Advanced Enterprise software stack:
J2EE 5:
– Server Side Components
– Distributed Objects
– Asynchronous Messaging
– Web Services
– Persistence
– Security
– Resource Pooling
– Concurrency
– Transactional Integrity
And easy to code, that’s the breakthrough.
Amen to that. People underestimate how powerful and useful the full JEE 5 Stack really is. And with EJB3 and JPA, it became really easy to write code for it, in spite of what the Spring crowd rants about.
But the good news is, regardless of who acquires Sun (likely IBM or Oracle (Software),HP (Hardware), we’re talking about huge vendors that make huge amounts of money with their respective JEE 5 App servers (WebSphere, WebLogic, OAS), so the full JEE 5 stack will around, and continually supported and improved, for a very long time.
IBM/Sun didn’t really sound like a good idea for Sun so its sort of good news that it may be over (if it was ever happening in the first place).
Like others I think Novell (or Dell) would be better options for Sun to merge with (or get acquired by) – Fujitsu would be another option too. Whatever happens if Sun are going to be a significant force in the industry they need to fix the basic problem – being really bad at selling the great technology they make.
Thom, HP is not going to buy Sun. HP is busy digesting EDS at the moment, so you can strike them from the list of Sun suitors. HP wants to grow their services division not take on Sun IP.
Dell is the only American company that makes sense. They don’t have any high end enterprise systems or any Unix presence. I don’t see any indication Dell wants to focus on anything other then x86 hardware though, so I don’t think that is going to happen.
Sun is pretty unattractive aside from the legacy of the company. There’s nothing I can see a company paying for that they wouldn’t rather pick up at an estate sale minus the rest of the company.
HP and Oracle actually made a joint offer, where HP would get the hardware, Oracle the software.
Sun initially declined, because they were in exclusive negotiations with IBM.
Now there are rumors that HP/Oracle deal has life again, due to the IBM deal (temporarily, at least) is off the table.
Should be interesting …
“Considering that Sun is dirt cheap right now with a market cap under 7 Billion and Apple has 25 Billion in the bank. Sun’s technology alone is worth that money not to mention their high end customer base which is difficult for Apple to crack alone”
Your comparing the irrational debt heavy Consumer market which was refinancing their bubble homes (which are now crashing in prices) to prudent corporate spending which has only increased 5% year over year.
Sun products dont sell since there are cheaper alternatives in the market place. And corporate decisions are based on fast payoffs.
The day of Cadillic spending is over.
Hmmm, a very interesting way indeed to look at SUN and Apple. There are certainly cheaper alternatives to Apple’s hardware/software bundles but they are selling like crazy. Perhaps Apple’s better design and better marketing could do wonders for SUN’s hardware/software bundles.
Note that there is a cloud computing “gold rush” going on which may revive the demand for high end servers back to the internet boom days in the long run. If Apple can strike the perfect blend of OS X+Solaris high end features + impeccable development tools for WebObjects + JAVA running on custom multi Sparc processors servers etc… They could take the world by storm.
Between Apple + Oracle + Google (3 companies with management that are very friendly with each other) they could buy all the parts of SUN.
Time will tell.