IBM Wants to Buy Sun - Why?

Includes: CSCO, IBM, JAVA
by: Sramana Mitra

Boy, I wrote the last Sun piece with a recommendation for Sun (JAVA) to hold on to its OpenSource business, and divest the hardware business, and thought that Cisco (NASDAQ:CSCO) may be interested in the DataCenter business in particular.

And the news Wednesday morning was that IBM is considering buying Sun for about $7 billion.

Well, if Sun can get that offer, good for them, and they should sell. I just feel a little uneasy about IBM acquiring ALL of Sun, not for Sun’s sake, but for IBM’s. Sun’s P&L is not a pretty picture. IBM’s is a dream.

Why does IBM want to saddle itself with Sun? Acquiring additional server market share? Java? OpenSource? Some shady networking technology to compete with Cisco? That makes no sense. There are far better acquisition targets in networking than Sun. Blocking Cisco from acquiring its way into Data Centers? May be. Preventing Java from landing in the hands of Cisco? May be.

In these days of trillions and billions in bail-outs and welfare, it looks like someone is willing to bail Sun out with $7 billion. I am just perplexed to see that entity is IBM, not Obama.

The only explanation seems to be that IBM wants to block Cisco.