IBM in talks to acquire Sun Microsystems

by Michael Smith

Deal would strengthen computing giant’s open source credentials but will that be good for Open Source and the freedom of open source and the code?

IBM is in acquisition talks with hardware and software platform vendor Sun Microsystems, who are also, in a way, behind Open Office, according to the Wall Street Journal.

The report has been neither confirmed nor denied by either party.

According the Wall Street Journal’s sources, IBM would pay at least $6.5 billion for Sun Microsystems. That is almost twice its present market capitalization, but half its total revenues in the 2008 financial year – testament to the fact that investors have little faith in Sun’s ability to make money this year.

Sun has had a disastrous financial year so far. The company lost $1.7 billion in the first quarter, announcing shortly after that it plans to lay off 6,000 employees.

Among the many causes of Sun’s woes have been some expensive acquisitions, notably that of storage equipment manufacturer StorageTek in 2005 for $4.1 billion and MySQL for $1 billion. The latter, in particular, formed the basis of a ‘commercial open source’ business model that has yet to prove ‘commercial’, in the traditional sense.

That means that IBM may be picking up a bargain. The IT giant has also built an open source strategy, which would be bolstered by Sun’s credibility (if not profitability) in the field. However, there may also be an overlap in the companies’ hardware portfolios.

This is, probably, one story of “don't be greedy” and the same could be a warning for other when it comes to acquisitions.

In my view the question is that while this acquisition of Sun Microsystems by IBM may give IBM open source credentials, the question, as I stated to begin with, is whether this is good for Open Source in itself.

The takeover, if it comes to it, by IBM of Sun Microsystems may not, necessarily impact on the most famous and most used open source office suite, that is to say Open Office, as the development, in the main, is done by the Open Office,org team, but Open Office is, nevertheless, part of Sun and there is always the possibility that, suddenly, the free open source office suite we are used to will not longer be free or available.

I guess we will have to wait and see as to the outcome.

© M Smith (Veshengro), 2009