An IBM-Sun tie-up offers few advantages in storage arena
With a purchase of Sun Microsystems, IBM would eliminate its biggest competitor in the high-end tape storage systems market, gain middleware to help manage increasingly complex storage networks and possibly get a leg up on new innovations in solid-state disk technology.
Sun bought StorageTek, a leader in enterprise-class tape storage systems, in 2005; IBM has long been Sun's chief rival in the high-end segment of that marketplace.
While IBM's purchase of Sun would bolster its storage customer base and eliminate competition, it would also create significant storage product overlap. Big Blue would likely gain more in intellectual property (IP) and people talent than any boost to its existing product sales.
While Sun and IBM both sell in the high-end storage systems market, IBM holds three times the market share.
Neither Sun nor IBM do well in midrange storage, and enterprise-class systems is an area some believe is tanking due to an uptick in more modular, flexible storage platforms based on high-capacity, lower-performance disk drives and commodity hardware. Both IBM and Sun resell midrange arrays from LSI Logic Storage Systems Inc.
"We think both of those companies will have to expand their storage portfolio," said Rick Villars, an analyst with IDC in Framingham, Mass. While Villars has heard past talk of an IBM-Sun merger, the current recession makes the prospect even more possible given that companies are looking to consolidate resources.
Overall, when it comes to external storage systems market share, Sun is at the bottom of the heap behind EMC, IBM, Hewlett-Packard, Dell and Hitachi Data Systems. IBM does share one dubious honor with Sun: dismal external storage systems sales. In the fourth quarter of last year, both IBM and Sun saw huge drops in sales of worldwide external disk storage systems, according to sales figures released by IDC earlier this month. Sun, which holds about 5.7% of the external storages systems market, saw more than a 10% drop in revenue -- a figure topped only by IBM's 11.3% drop. EMC, Dell, HP and Hitachi all saw revenue gains last quarter, with Dell leading the pack. "Frankly, I don't know why anyone would want Sun," said Jon Toigo, founder and senior analyst at Toigo Partners International LLC. Toigo noted that rumors of an IBM-Sun merger have been around for years, though few people took them seriously.
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Thanks much Johnny
I guess as both a shareholder and former employee, I would rather see IBM buy Sun than some venture capital outfit. Sun has some things that IBM could use and does want (cloud computing, Java, large telco, gov't, and finance customer base to name a few). I agree; there's nothing special about Sun or IBM storage; the fiber stuff from LSI outright sucks.Either way, thanks much ponytail. I hope you get what you want out of this. You have run a good company and good people deep into the dirt. I hope you make enough to love off of 'cause no one with a brain ought to hire you to run another company.