Submitted by Dropping profits and stock prices have analysts speculating that Sun could be a target for either acquisition or a restructuring in which the company would sell off parts of the business and focus on a smaller set of technologies. In a July 31 report, the 451 Group analyst firm raised the possibility of Sun being acquired: ‘Sun’s sunken stock price creates a relative bargain considering its roughly $4 billion cash on hand, sizeable intellectual property and patent portfolio, and of course, its respected technology and products’.
This is a highly speculative article that quotes various analysts’ thought about a possible acquisition of Sun. This year Sun went through a round of lay-offs (again) as a cost cutting measure, which makes me believe this is not a completely unthinkable scenario.
A remote chance of Microsoft acquiring Sun was also discussed in the article:
“A Microsoft-Sun merger or acquisition may have seemed unthinkable five years ago, but seems more possible since the two companies have been working increasingly closer following a court settlement and newfound friendship (forced by customer demand for interoperability in 2004),” Lyman wrote.
This doesn’t strike me as even a remote possibility.
Sun’s recent open sourcing of Solaris, Java and NetBeans makes it clear that Sun is more inclined toward OSS. Microsoft is a company that makes its money from selling software and not hardware. Donating money to Apache foundation is one thing, but rolling up the sleeves and getting their hands dirty in the open source arena is a whole another thing.
Even though Microsoft would like to see its Operating Systems running on Sun Servers I don’t think they’d want to start selling servers anytime soon.
Sun has made some of the wonderful innovations in the filed of Operating Systems (DTrace, ZFS, OpenSolaris etc) and Computing (Java). It’ll be sad to see them get bought out.
“Dropping profits and stock prices have analysts speculating that Sun could be a target for either acquisition or a restructuring…”
stupid analysts maybe. aquisition no, restructuring, possibly. If you look at Sun’s recent moves like buying up MySQL and VirtualBox and what they are doing with open sourcing a lot of their stuff that are just shifting in a newer direction. their old business modle wasn’t working, same with IBM and others who were big server companies.
So will Sun be bought by someone else, no, to think so would be rediculous. But it has been clear now for over a year that they are changing direction a bit from their older business model and that takes time to get settled and pull in a true profit.
The economy is tough for everyone right now, when it turns around Sun will bounce back, these slupms just happen. economics 101.
Edited 2008-08-27 17:32 UTC
i agree
The economy is tough for everyone right now, when it turns around Sun will bounce back, these slupms just happen. economics 101.
Mmmh, no, the economy is not tough for “everyone”. In fact, companies competing with Sun in the server space seem to be improving their market share and their benefits faster than Sun. In Q2 2008, Sun revenue was 6.8% lower than the same quarter the past year. All the other server guys grown except them and Fujitsu. IBM revenue grown 11.5%, Dell 15%. Shipments grown 24% for Dell, HP 8.7%, IBM 4.7%, Sun 1.1%.
So yeah, the explanation must be the economy. But only for Sun.
It hasn’t been very different in the latest years (with some exceptions). Sun is just selling less than their competitors. I recommend taking a look at http://www.theregister.co.uk/2008/08/22/gartner_server_q2_2008/ . Unless they fix this trend, I don’t see why Sun couldn’t be bought, just like any other company, if they accept the deal.
Edited 2008-08-27 18:47 UTC
I think the economy does have something to do with it. In my own recent purchases, I have gone with Dell and Red Hat over Sun and Solaris (which I actually prefer) for no other reason than cost.
If the economy wasn’t tight, I don’t think cost would have been the deciding factor and I would have gone with Sun servers.
Agreed, the article if anything shows that “Analyst” for the most part have no clue what they are talking about.
SUN is too large to be acquired, and they are positioning themselves and doing a lot of things right: Niagaras are bringing a lot of revenue. Hopefuly they can get their act together with Rock.
And I assume they are shifting to a services-oriented company based around solaris. Which is a good move IMHO.
I agree. It was a stupid article and analysis.
The problem with economics 101 and the citing there of is that if you read rest of economics you’ll realize that everything taught at econ 101 was at best a gross oversimplification and at worst completely wrong. Thus any argument made based solely on anything taught in econ 101 is at best a gross oversimplification and at worst completely wrong.
The economy is incredibly complex and anyone telling you that it can be completely explained using a simply supply/demand curve is probably lying.
So will Sun be bought by someone else, no, to think so would be rediculous. But it has been clear now for over a year that they are changing direction a bit from their older business model.
Why is it so ridiculous? If shareholders are dissatisfied and someone gives them a good offer why not? I am aware that Sun is performing much better from a financial point of view than they have for a long time, but they are still losing out in the server market.
I am not saying it happens, but I have seen more surprising things than a takeover of Sun.
if you hve followed Sun over the years you will know they are a very proud company, and as far as i recall they have majority control of their shares, so the likelyhood of them allowing themselves to be bought out is slim to none
Edited 2008-08-27 17:59 UTC
You see, respect has it’s limits too
In the recent past (about 5 years ago), a Dell+Sun merger (or whatever) made great sense. Sun was trying once again to get into the x86 business (without any good track record for low margin/high volume scenarios) and Dell didn’t have anything (and arguably still doesn’t) on the high end.
But since that time Dell has tried (and apparently is still actively trying) to commit suicide. Doesn’t make the Dell+Sun deal that attractive anymore… (which probably means it will be attempted… company’s timing usually stinks). Sun’s delay on delivering the Rock processor (arguably because of IBM’s P6 and now P7 announcements) didn’t help Sun out any. Sun’s secret was the fact that Niagra 2 can be used in a multi-socket scenario… but the news of that didn’t really impress ANYONE. Schwartz seemed like a good choice for CEO at first, now, it’s difficult to see where Sun is going… they seem to be happy treading water (but the water level keeps getting higher).
I would think (if it were true that Sun were setting itself up for sale… which I don’t believe is necessarily true at this point) that HP and IBM would be the new suitors. It fits better probably with HP…
just don’t how many “strange” architectures one company needs
Dell+Sun 5 years ago would have been the savior of both companies. And I’m not viewing this with 20/20 hindsight… you can search and find my proposals for this about 5 years ago or so (back in the McNealy days).
The arms race with HP and IBM is in the service sector. Witness HP buying EDS, the number two IT services firm behind IBM.
Now for my wild predictions.
1) Acer: The number three PC manufacturer, but not a force in the server arena.
2) Sony: They sell computers, have a funky proc, and have a sense of style.
3) Apple: They were the buyee last time this rumor came up.
4) Asus: They’re fat with EEE cash (I guess), and they make more sense then Lenovo.
5) Subaru: I’ve always wanted a AWD sun server, and a car with openboot and solaris sounds nice.
Buying MySQL for $1B was a dreadful move.
It wasnt even worth that much.
Sun Boxes are too expensive, Someone in Sun needs to understand all Hightech products be hardware or softwrae are a commoditiy.
(1) They need to move the expensive R&D staff out California to another cheap state along with the staff. Maybe Arizona or New Mexico.. Cost of labor would be more reasonable. They need to fallow others like Oracle , HP and majority of the Semiconductor giants like Intel, National and AMD moved all their expensive staff to Sac-town, Arizona,Oregan and Washington.
(2) Scrap their current pricing model and focus on competitive pricing with HP, Dell, and IBM where they can give discounts and still be profitable.
The problem with Sun tries to sell expensive products that dont compete with cheaper alternatives and expensive staff which is a burden on operations. Current geeks running SUN are unable to understand “This is a Business” and not some pet project where engineers rule everything. The only way to survive is take Intels example and cut the waste and fat.
You obviously haven’t tried to buy a Sun box lately. Their low end x86 gear is surprisingly cheap (I know, we priced them). We didn’t buy from them in the end because you can’t order directly from the ‘Net (like Dell or others). They want you to talk to a sales guy and for low volume orders the sales guy takes a while to get back to you – in our case three days but we needed something next-day. That is a big problem for Sun (even if they don’t know it) they are missing easy sales (small quantities, but large volume overall).
Incidentally, we found that Mac Minis had similar specs to rack-mounts and were adequate for our purposes (file server for a small network).
Mate, I said this over 5 years ago – but no one listened to me. All I received from Sun engineers was abuse, hatred and cursing at me – because I didn’t understand the ‘wisdom’ behind their ‘sales model’. I knew sales staff in Australia – believe me, they were tearing out their hair knowing that sales were getting lost because as soon as the customer heard, “go through…..” the customer said, “f–k it, I’m going [some other company]”.
To me, as soon as a company says, “you have to go through….” they are saying to me that my business is unimportant, they have no interest in selling me anything because I am not worthy of their attention. That is the attitude I receive when I hear companies divert sales from themselves to a third party. I simply hang up and go to another company to purchase it. They’ve lost a sale.
In an age of the internet; there should be no reason why goods aren’t being shipped from three main warehouse locations around the globe and a website that caters for orders, where ever they happen to be coming from. It amazes me when I see businesses who say, “we do not ship outside the US”, I really ask myself – are they interested in making money or are they just existing as an organisation because it makes someone feel special?
These issues have been rehashed over and over again, I don’t think Sun is going to die, but they are going to become less and less relevant as they as an organisation are unwilling to appoint leaders rather than simply managers. One only needs to look at the open sourcing of Java for instance, the lack of leadership when it comes getting things done like hardware specifications from other vendors – leaving it up to ‘engineers’ to do the discussion instead of management doing what they’re employed to do.
As for Jonathan, it all due respects, he is no better than Scott, and Scott is no better than Zander, who basically turns everything he touches into crud – look at Motorola as a prime example of that. He couldn’t do a proper job at Sun, leaves to Motorola, and runs that one into the ground.
Edited 2008-08-27 20:53 UTC
And how.
I just bought Sun gear for the first time, though I’ve administered old SPARC hardware for years and built dozens of my own Solaris x86 boxes. We bought it off the website. Two weeks later, a gazillion little boxes show up. WTF? I’ve got to put ALL of this together?
Some of the parts didn’t fit and it took THREE WEEKS to get the situation rectified via support (egg on my face for even trying and not relying on myself only, but I was curious about what the experience would be).
Phew. What a mess. But the server was eventually up and running (and 20 lbs of cardboard boxes recycled).
Then what? The bill for the extra warranty shows up. What? Didn’t we already pay for this… on the website? I call about it and the lady informs me that , “No this is a separate department”. What? How many Sun employees does it take to screw in the light bulb, then take take the check and cash it?
It was like being transported back in time. I almost expected to be asked for something memeographed in triplicate.
And even though I’m pissed that Sun didn’t just go with Debian’s repository for OpenSolaris, I’m still a fan of the OS. But for crying out loud, please make it easier for me to give you money.
Count yourself lucking; those of us outside the US can’t even order off a website – and when ringing up Sun we’re told to ‘piss off’. Things just keep getting worse when you get further from SUN HQ. Don’t get me started about their bureaucracy – the company has absolutely no focus what so ever. I swear people at Sun just go to work, aimlessly wonder around for 8 hours each day, randomly doing stuff then go back home.
There is no structure to the development of any of their products – things just seem to get heaved at Solaris with no attempt to ask how this all fits together as part of a ‘grand plan’. They wonder why they’re losing money, losing marketing share, and customers are dropping them like a bad habit. *shrugs* whats the likelihood they’ll get another manager who is clueless. Christ, even *I* could do a better job.
Reminds me of the manager in NZ who never go back to me – and people wonder why I have a low regard for Sun.
Yeah. It is very hard to get gear like the SunSpot in some countries (like New Zealand) – which is a very nifty little gadget programmable in Java
http://www.sunspotworld.com/
Last time I looked at their website, Sun’s x86 gear was quite competitive in terms of price. Their SPARC gear also seems to stack up well compared to IBM’s POWER gear or HP’s Itanium gear…
Anyways, if Sun does get bought up, I hope it’s by another Open Source-oriented company and not come SCO-type entity that wants to close up everything and become litigious.
Doesn’t Cisco have a similar model?
I don’t know where you are getting your pricing information from, but in the x86 market which HP and Dell are primarily involved in Sun’s pricing are very competive. Have actually ever worked with a Dell box? Any who would buy one of those over a Sun machine is loony in my opinion
Now, their SPARC line is expensive but so is any RISC based server from ANY manufacturer. Ever look up the price of a Power6 based server from IBM?
“The economy is tough for everyone right now, when it turns around Sun will bounce back, these slupms just happen. economics 101.”
When Silicon Valley goes in a recession, few companies survive by the time we have any rebound. The majority went under really fast. Tandem Computers was as big as Sun but never made it. The 1991 recession was brutal and the only saving grace was
the commercialization of the internet. Now nearly
8 years from the 2000 bust there isnt any new wave
of innovation as earth shaking as in 1995. I dont expect any new “must have products” to appear this time
around. So we continue to see price erosion on goods and services.
Tandem was nowhere near the size of SUN, they were a fairly small outfit doing very specialized systems for real-time fault tolerant and transaction-oriented environments.
And they did not go under, they got bought by Compaq.
My guess is that .NET + Windows 2003 Server + Intel are a cheaper invertion than Java + Sun Servers. That is a lethal combination for Sun.
My guess is that Java + Linux + whatever is cheaper than .NET + Windows 2003 Server + Intel
Maybe it is, but even if that’s the case it doesn’t exactly help Sun.
This is all analyst speculation, though. Sun has some pretty good technology, so they might be able to pull it together if they regroup and focus on a tighter set of products and services.
I will say it, at this point apple should really consider purchasing SUN, along with the purchase of CUPS, and then MYSQL this would add to apple’s OSX server platform.
Furthermore they are already using ZFS, and DTRACE apple would have a storage platform again to build upon as well as a solid unix foundation. Also finally a developer community. If they were smart this would be a good play
apple would never buy Sun, their core business’s are nothing alike. more than likely a stetegic partnership would and possibly will come of their shared technologies (apple using ZFS and Dtrace).
I agree with you to a certain extent that a strategic partnership would likely be the case. However I do think that it would be a good business move, if Apple did purchase SUN and made the group their enterprise group.
This would allow the bulk of Apple to continue to focus on their consumer products and supply Apple with enterprise innovation and community.
OS-X server could get some clout being that it had the SUN unix backing. This would seem to me to give Apple some real UNIX clout.
It could also increase it’s standing as a developer platform by integrating MYSQL more. Maybe even a Time Machine, ZFS, MYSQL, xVM virtualization & SUN Storage technology solution.
Edited 2008-08-27 20:07 UTC
I agree with you that their core businesses are very different, but I wouldn’t say Apple will never buy Sun (or their software/hardware devision(s) if they were to spinoff). The IP and engineering talent alone are worth the price tag for Apple. And depending on how serious Apple are about the enterprise market, they might get a client or two from such a deal. Back in the real world, though, I don’t really see Sun going for sale or selling parts of the company any time soon.
Sun basically has two near-monopolies: one is on the OS, the other is on the office suite. Sun owns the only real competition to Microsoft Office out there. The FTC isn’t going to allow Microsoft to control OpenOffice.org.
Novell? but that would the same thing as Microsoft :/
Or, maybe the US government will buy Sun… You see, the “always reliable” Internet tells us that the USA already owns the Moon so why not buy Sun too..?
http://americaisthebest.com/?p=87
More seriously, I don’t think that anyone’s going to buy Sun any time soon, not the Sun in space nor the one that gave us Java & Solaris. As long as there are no actual fact-based news these kind of rumors are no news at all, and only serve Sun’s competitors and their possible FUD or other motives.
there is VIA and SUN can sell 50$ its OS (like SLED or Boxed OpenSuse) per netbook created by VIA. Moreover there are zillions of Atom mini-devices where SUN can sell for 50$. For example I have no problem to buy an MSI WIND with OpenSolaris and pay 50$ for it (if kept open source). I also have no problem to buy C7-D mini dekstops like DreamBox and pay 50$ for OpenSolaris. I also have no problem to buy Atom based mini desktops and pay 50$ for OpenSolaris.
I doubt SUN would really be up for sale, but if they did sell, I would think they would sell to anyone but Microsoft. Getting government approval would be tough and other competitors would try very hard to scuttle the deal.
Get Apple UI designers working on Java Swing (or a new Apple based GUI toolkit), then Java could really, finally, make a decent splash on the desktop or in RIA.
At the same time, Apple could diversify into the enterprise space.
Also, Apple would be getting a ton of cash, IP, engineering talent, and enterprise contracts.
I could actually see an Apple purchase of Sun being possible and good.
The only gotcha would be that Apple’s business model is a very proprietary walled garden, while Sun has gone full-bore open source (at least with Software). A Sun purchase by Apple would entail a very major culture shift at Apple.
In any case, if Sun doesn’t do something drastic sometime soon, I see them continuing to slowly fade into irrelevancy (other than being care-takers of Java – nobody will care about their other products).
Regardless, it’s all BS right now, but fun to speculate.
Check out Java 1.6.0 update 10 (in release candidate, http://java.sun.com/javase/downloads/ea.jsp) and will be released within the next month or two. It has a new resolution-independent theme called ‘Nimbus’ that looks quite nice (certainly much better than the ‘Metal’ or ‘Ocean’ themes).
Definitely a step in the right direction, and all Java2D drawing operation are DirectX hardware accelerated on Windows. Best thing of all, you don’t have to change a line of your existing Java applications to use these once you’re running that version of Java.
wow directx 2d support! You would have thought it would have been there ages ago….
I wonder, will they have 3d support in 2018?
Well, Java 2D was hardware accelerated using OpenGL a long time ago. However, on consumer-grade hardware the DirectX driver usually gets more attention than the OpenGL driver, so adding a DirectX implementation means a speed-up for Windows users that have vendors with poor OpenGL support. No need to be a wanker about a subject you are not familiar with.
Um, Java3D has been out for ages, and there is JOGL as well (which is multi-platform).
So, was what the point you were trying to make then?
“Check out Java 1.6.0 update 10 (in release candidate, http://java.sun.com/javase/downloads/ea.jsp) and will be released within the next month or two. It has a new resolution-independent theme called ‘Nimbus’ that looks quite nice (certainly much better than the ‘Metal’ or ‘Ocean’ themes).”
I’m using that right now. Nimbus is a huge improvement over Ocean (which is decent, but rather primitive), and especially Metal (which is horrible).
Also, start-up times are greatly improved for Java Swing apps in update 10. I also like the “Java Kernel”, which is a 4 meg download, with the rest of the platform downloaded later.
Those are all huge improvements, but still long overdue. Also, Swing is looking and performing much better, but it’s still not up to snuff with WinForms, Qt, or SWT, all of which ultimately utilize widgets and/or rendering engines of the underlying platform.
For general desktop use, I use a variety of apps written Java Swing, Java SWT, Win32, WinForms, Qt, wxWidgets, and GTK. They’re all good to varying degrees, but I tend to naturally gravitate to the ones that use native libraries under the hood. They just look better, perform better, and behave better.
And that’s what I’m getting at. For more apps to use Java Swing, it not only has to get better (which has been), but it has to be at least on par, if not better than, native GUI libraries. Otherwise, ISVs, Open source devs, or anyone else won’t be inclined to use it.
take a look at http://blogs.sun.com
jonathan schwartz’s blog was always in top 5 (popular blogs), but i cant see it for a while. maybe removed intentionally? ( /jonathan/ works though)
is he gone ??
i hope, sale talks do not effect java(6u10)&javafx developments. we are waiting for years to see those things
So? Big deal? If you go to Sun’s home page, Jonathan Schwartz blog is listed there as the first one in the Most Popular Sun Blogs list: http://www.sun.com/ , and his last post is less than month old.
I don’t know if Sun is going to be bought sometime in the future or not, what I do know is that Sun seems to be following the steps of SGI…
What? How many Sun employees does it take to screw in the light bulb, then take take the check and cash it?
Exactly… they are way too big to be agile in the market place.
Sun has some pretty good technology
What we learned many years ago is good or “the best”
technology” doesnt win out. We can see Microsoft
for that example. Peoplesoft had pretty good products
but they are gone.
At the end of the day Sun needs to make the numbers work else find someone that can run the “business” better.
Stock prices tend to go up and down because of small matters, fashions, politics etc, nothing new in that.
Sun has a very strong and well-known IT brand, even though they have been through some not so successful times lately. I would imagine that the Sun execs would do anything they can to save the Sun brand and company, and only consider selling as the last option if everything went totally wrong (which is very far from the current situation still).
They have have just been through some big changes and rearrangements which can explain the insecurity in the stock markets. There are many companies that are doing much worse, but they still get along just fine as independent companies and do not consider selling themselves.
If what the article said is true ( Which doesn’t make much sense ) that it has 4 Billion Cash in hand. Then Buying Sun is a BARGAIN!. It is currently worth a little more then 6 billion. With 4 billion cash it would means only worth 2 – 3 billion. So 7 billion cash to spend. Apple could easily do that.
This would bring Solaris to them. Label by IBM as the most advance OS on earth. OSX could use some of their enginerring talent.
MySQL and Virtual Box. It could help Apple to forge the necessary Apple Enterprise group. Where apple is WEAK on business and enterprise market.
So 3 Billion for all their product and enginerring talent. I think is a bargain.
I think sun in twelve months will be better then ever. Suns excs sees that Open source is the wave of the future and they are reorganizing the company to support the OSS model more, they opened up solaris,java, and purhcased virtualbox. no i don’t Sun will be sold with these kind of changes are going on.
Edited 2008-08-29 15:35 UTC
Buyout!? No way, think merger. My dream merger is Sun & Novell. They could consolidate a few things, but Novell staff definitely needs to be in the drivers seat in the Linux/enterprise end and Sun staff lead the hardware/Unix end. Everything in between is a lot of overlap between the two companies. I can see some serious complaining by Microsoft if such a merger took place.