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Report: IBM, Sun haggle on price, close in on deal

As IBM and Sun discuss price of a Sun buyout, IT pros and partners worry about loss of competition and key technologies.

As IBM and Sun Microsystems talk price of a proposed Sun buyout, IT pros and technology providers are weighing their options.

The companies are discussing a buyout price of between $9 and $10 per share, the Wall Street Journal reported late Thursday. That values the deal at approximately $6.7 billion.

Some IT professionals said the sheer girth of a merged company would make it less attractive as a supplier. They fear inevitable price hikes.

The director of technical services at a large Nebraska health-care facility said the deal "can only result in increased prices and less choice."

For more on Sun/IBM buyout deal:
Reports of IBM, Sun buyout roil data center waters

VARs weigh possible IBM takeout of Sun
A Boston-based technology manager was underwhelmed by the prospect of a Sun/IBM combo. "There's nothing there I'd want from Sun, and IBM has priced everybody out," said Bill Ovoian, the IT director at the Phoenix Media Communications Group, Boston.

Sun partisans fear for the Solaris operating system and the Sparc chip, which compete with IBM AIX and Power chips, respectively. Their concern is that the Sun-backed technology would lie fallow or perhaps even be discontinued, even though they consider it technically superior.

They also worry about losing other technologies. "What does this mean for [products like] Sun Open ESB (Enterprise Service Bus), identity and access management, and NetBeans?" asked the Nebraska technical services director.

But some say an IBM-owned Sun isn't necessarily a bad thing. "It's always been part of my strategic IT plans that if we needed to move away from Sun for some reason that we would most likely move to IBM," wrote a system administrator on an IT community forum website. "So amongst Sun buyout scenarios this isn't the worst that could happen by a long shot. … I wouldn't be happy, but it's not necessarily a terrible thing either."

Sun management, or lack thereof, made deal inevitable
The system administrator and others pointed to issues concerning Sun's executive leadership and marketing, which they find lacking. "In some ways, IBM firing the execs, sales and marketing people and keeping the rest of the company around could be for the best."

Many users and partners in the Sun camp said questions about the company's viability sealed its fate -- and that IBM was one of the few logical suitors. Others had speculated that Hewlett-Packard or Cisco Systems might bid for Sun, a prospect that seems unlikely now.

If [IBM doesn't] destroy the recent versions of Solaris, we will be fine.
Jeffrey Hiris,
systems managerCenter for Gerontology and Health Care Research, Brown University

The two vendors already share many customers despite their technology overlap. Some say it will be business as usual regardless of the outcome.

Brown University runs every flavor of hardware and software on its Providence, R.I., campus. Jeffrey Hiris, a systems manager at Brown's Center for Gerontology and Health Care Research, said the school has Sun technology for its Unix server that runs alongside IBM and Hewlett-Packard gear. "We had a meeting about this a few weeks ago, and the general feeling is that if it happens, we will cope with it," Hiris said. "We don't have massive Sun clusters or Sun grids. If they don't destroy the recent versions of Solaris, we will be fine."

Since word of talks leaked two weeks ago, other IT professionals have struggled to come to terms with what a converged company would mean.

"I'm not sure what I think," James Dobson, systems architect at Dartmouth College told after the first news leaked. His department runs both Sun and IBM hardware, mostly on Linux with a little OpenSolaris. "Our relationship with Sun in the past has been great, and we are pleased with their systems and software. They've done great stuff … with Open Solaris, MySQL, etc., and I would wish that they stay viable as an alternative systems vendor."

Sun partners wary
Sun supports a fairly limited number of value-added resellers (VARs) many of which say they make better margins than their IBM counterparts. One East Coast Sun VAR said that in one respect, he's happy: He bought Sun stock at $3.50, and it's now trading at more than $8, thanks to takeover chatter. But as for the future of his Sun-related business, it's impossible to say, he said. "There's so much uncertainty."

IBM typically likes to integrate acquired companies' products quickly and rebrand them with the IBM name -- which could be "quite the change" for Sun partners, said Darren Bibby, IDC's program director of software channels research. He also said the deal would create more competition for IBM partners but bring new opportunities to Sun partners, which would now have access to the full IBM portfolio.

Solutions providers that partner with both IBM and Sun stand the most to gain from the potential acquisition, said Vince Conroy, chief technology officer for FusionStorm, an IBM and Sun partner in San Francisco recently.

"We have invested a lot of resources in both technology sets," Conroy said.

The deal makes sense given IBM's interest in open source, Java (which Sun owns) and the database market (where Sun owns MySQL).

"That's a good fit for the way IBM's trying to go to market," Conroy said. He also said the acquisition would benefit Sun customers, many of which have been concerned about the vendor's financial future. "They're getting some assurance of strong financial backing," he said.

Barbara Darrow wrote this story, with contributions from Alex Barrett, Bridget Botelho, Jo Maitland, Margie Semilof and Colin Steele.

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