Users, analysts cite potential benefits and pitfalls of IBM buying Sun

Reported acquisition talks between server rivals raise questions about future of Sun technologies

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Another consideration is the fact that the market shares of all the major Unix operating systems — AIX, Solaris and Hewlett-Packard Co.'s HP-UX — have been eroding in the face of competition from both Windows and Linux. But Unix systems continue to be embedded within many companies, often as the platform of choice for mission-critical applications and databases.

At this point, analysts and users such as Daniel Grim, executive director of networks and systems at the University of Delaware in Newark, can only speculate about what IBM might do with Sun's hardware lines.

Grim, a longtime Sun user, has been adding more Sparc systems to run the university's PeopleSoft applications, but he foresees a long-term shift away from that technology. On the other hand, Sun's x86-based hardware is appealing as a platform for Solaris: "We like the designs, and we like the price," Grim said, adding that Sun's offerings tend to be significantly less expensive than equivalent x86-based products from some of the other major server vendors.

One drawback is that some application vendors are quicker to support Linux than they are Solaris, Grim said. But bottom line, he isn't sure what an IBM takeover would mean — whether, for instance, he eventually would have to switch from Solaris to AIX.

IBM could shut down or try to sell off Sun's Sparc business, but it would risk losing the installed base of customers like Grim in the process. Deciding between Solaris and AIX is "a decision that IBM has to make" if it does buy Sun, said Vernon Turner, an analyst at market research firm IDC. "That's probably a difficult choice."

Bob Massengill, manager of technical services at Wake Forest University Baptist Medical Center in Winston-Salem, N.C., is a longtime user of the StorageTek storage products that Sun acquired in 2005, when it bought Storage Technology Corp. for $4.1 billion. Massengill said he thinks IBM might do away with the midrange storage devices from StorageTek that he uses in favor of its own products if the two companies agree to a deal.

IBM also might be getting damaged goods in the storage market. For instance, Massengill was critical of Sun's handling of the StorageTek acquisition, saying that customer service has suffered since then. "StorageTek did provide some of the best customer service of any vendor we worked with," he said. "All of that went away when Sun acquired StorageTek."

In addition to Sun's products, the corporate culture that it has fostered poses potential benefits — and challenges — for IBM.

"Sun is a company that has been based on and driven by the work of mavericks," said Charles King, an analyst at Pund-IT Inc. in Hayward, Calf. "I think it's critical for IBM to somehow maintain the culture of Sun in a way that preserves that history of innovation. It's one of the great things about Sun."

Sun's future "has been uncertain, and their financial performance uninspiring, for some time," said Rob Enderle, an independent analyst in San Jose. "IBM, on the other hand, has emerged as nearly invulnerable in this market, having shifted largely to a services and software model."

Enderle thinks that putting Sun under IBM's control would reassure existing customers and stabilize Sun's user base. And, he said, Sun's intellectual property holdings, in particular its software, "could significantly bolster IBM's portfolio for the battles for the cloud that are to come."

Copyright © 2009 IDG Communications, Inc.

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