For IBM, the Allure of Sun Lies in Next-Gen Software Services

Longtime rivals in the network server market, IBM Corp. and Sun Microsystems are in the midst of merger negotiations, according to numerous media accounts.

IBM's rumored offer to Sun of approximately US $7-8 billion would bolster Big Blue's share of the lucrative market for hardware to feed the gluttonous appetite of the growing Internet. Still, the long-term strategy for the Sun acquisition may lie as much in software as it does in hardware for IBM, as well as in reaching the hearts and minds of the software developers who create the state-of-the-art applications generating the need for evermore increasing processing power.

The IBM-Sun talks, first revealed yesterday by the Wall Street Journal, would give Sun stockholders $10 per share, ending the independence of one of Silicon Valley's most fiercely independent computer firms.

Founded in 1982 by a rag-tag cadre of young venture capitalists, engineers, and business wonks, Sun (which took its name from the Stanford University Network on which its engineers previously worked) made a big splash in the early workstation niche of the Eighties, where enterprises from manufacturers to universities needed more binary muscle than PCs could provide but less-expensive machines than those offered by companies such as (ironically) IBM. Sun even developed its own version of the Unix operating system, called Solaris, to make its minicomputers more user-friendly.

Leveraging its network-computing expertise, Sun really took off in the Nineties with a marketing campaign that was epitomized by the motto "The Network Is The Computer" as the World Wide Web exploded into economic importance. Astoundingly, Sun engineers next devised a new programming language, dubbed Java, to expedite the creation of network-based applications and then gave the language away for free, garnering an immense amount of interest (some would even say devotion) from the worldwide software development community.

During the go-go years of the Web revolution, Sun was a darling of Silicon Valley and Wall Street alike, but it was a honeymoon that had to ultimately settle for a troubled marriage. Sun soon found itself under pressure to lower its prices on mid-range computers, scaling them down in size, as competitors in the PC sector geared up the power of their low-cost machines to handle the duties of Web servers, as everyone jumped into the Internet business. Sun even had to fend off the advances of the titan of the software world, Microsoft Corp., in an epic legal battle over the use of Java that lasted years. Then the Web bubble burst, and Sun never fully recovered.

As an article in yesterday's New York Times rightly points out, Sun continues to be a major player in the lucrative area of data-center equipment, but the company has been in financial difficulty for years and has recently been looking for an alliance with a large corporate parent.

A deal with IBM would bring a rainbow of synergies to the two firm's families. Sun's fluid architectural skills and maverick research-and-development philosophy would bring an injection of West Coast zest to Big Blue's tradition-crusted management of innovation and product development. After cutting away overlapping technology, IBM would be able to promote an end-to-end line of server products capable of meeting the needs of providers from boutique outfits to massive enterprise data centers. Moreover, IBM was one of the first firms to embrace the possibilities of Java and became Sun's biggest champion in keeping the language as "pure" as possible in its fight with Microsoft, even encouraging its progress toward an "open" source-code model. As unofficial partners, Sun and IBM have devoted more software engineering brainpower to Java over the years than the rest of the computer industry combined.

Yet, it is in the potential of data-center services where an IBM-Sun coupling could yield the most profitable outcome. As a news analysis yesterday from Dow Jones pinpoints, the biggest names in computing have embarked on a looming war for the future business of corporate information technology needs. The latest sensation in this sector is known as "cloud computing," where enormous numbers of machines process shared commands via network protocols to deliver services to end users. Cloud computing depends on both scalable hardware and software to become "virtual" resources, and this is where Sun's engineering savvy and developer following could provide IBM with an unmatchable advantage.

Sun claims to have over one million dedicated independent Java developers, who stand at the forefront of creating next-generation applications that will employ the cloud-computing concept. Those applications, ranging from cellphone services to design engineering tools, will fuel the rush to the leasing of data-center resources when economic conditions rebound globally.

It's a long-term strategy that could position IBM ideally to dominate the future of computing (once again), as well as finally give Sun's engineering virtuosos a sound and stable home to continue pursuing genius.

[For more on the coming data-center war, please see Tech Titans Building Boom by Randy H. Katz in the February issue of IEEE Spectrum.]

The author is a former Dalang of Gamelan, the world's first Web site devoted to the Java programming language.


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