http://tinyurl.com/c46kwg
Reports that IBM is taking a serious look at Sun, clearly a lot to read about on this in the next 24 hours. The following is assuming that it goes through and the transaction develops. Clearly anything could happen to accelerate this, or to put the brakes on it.
From a services point of view, it is less strategic, Sun services is Sun product based support and consulting, could be some partner issues for services.
Positives
- Both have a strong research and lab culture
- IBM will pick up strong software assets with a genuine sense of community which IBM SW traditionally has lacked
- Strong and in some cases dominant market share in the server environment
- Sun gets resolution on its future
- Sun was starting to get it's mojo back
- Whilst both have strong Green Credentials, IBM is going to be able to integrate strongly the Sun ideas into it's offerings
- Both have realised the importance of the Data Centre in the future IT environment, HP has had some strength in this space, this positioning will be a clear improvement in the capability
Negatives
- There will be cultural differences, both at a management and at a workforce level
- IBM and Sun have flat or stagnant traditional product businesses. The reliance is on emerging offerings, still not making up the shortfall in the decline of traditional value points
- The next 12 months will be very difficult for hardware, hard to develop momentum when you are fighting for share.
- The Sun model is highly reliant upon a channel model, IBM has of course the sales force reach that is so very broad. Reconciling this will be a key challenge for them.
Impact on the competitive environment
Clearly this will have an impact upon HP. They are suffering with some internal issues and the economic downturn, having two of their largest, if not largest, competitors merge will provide some opportunities for them to act on the distraction and transition, but a well integrated IBM/Sun is an even more considerable threat to HP. The recent decision of HP and Sun working together around Proliant would be interesting to say the least.
Microsoft will also be impacted, both IBM and Sun are clearly pushing away from the Microsoft platform and heavily investing in open standards.
There will be an impact on Accenture which is a big Sun SI partner as well as with EDS, and perhaps the beleaguered Unisys.
Will this spark further consolidation, Dell and Sun were never a good match, but Dell needs to do something, perhaps swallow ego and tie up with EMC, but there will be some radical plays that could come out of this.
Impact for the CIO
Finally, and most importantly, the impact on the CIO and IT department. As with all of these situations, the first point of activity is to wait and see. It could be over as a deal before I write this. If it does go ahead, you will of course need to be ensured of continuity in the first instance, then of the product road map for both Sun and IBM products as integration occurs. If you are buying servers, then the next 6 months may be the best buying time that you will ever experience as HP looks for competitive share. Keep informed and keep your relationships at IBM, Sun and the competition informed as you need to be in a position to maximise your benefit from this and be assured of continuity.
Longer term, there is of course less choice, but as that becomes an issue, there is also the shift towards cloud computing, and hosted services that removes potentially some of the need for direct engagement and leaves the choice as an issue for the SAAS provider
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