One of the most surprising romances between technology companies may be that between IBM and Sun. What is the upside of a marriage between these disparate players?

The rumors have been flying, and there have been some confirmations of the two being sighted on dates. There appears to be some substance to these rumors, then, and there must be a logical basis for such a combination of companies. There are actually several possible advantages to both players, but the most significant one seems to revolve around storage.

IBM has a long history in storage technology. That history may be catching up with the Armonk computer giant, since they have stayed with older technology storage, according to an eWeek story. They are specialists in legacy style mainframe and mini-computer storage systems to match the systems they continue to sell and support. They have not changed their storage product lines to suit the times.

Sun, on the other hand is known as an innovator in all areas, including storage. This has been true throughout their history, and continues to be true with their Storage 7000 Unified Storage System, which pools multiple (and disparate) storage devices together to build a kind of broadly distributed network RAID system, which facilitates data migration across various hardware technologies housed in separate physical units. It allows users (even IBM big iron users) to add new technology to their existing storage systems, or even to replace storage systems with less expensive devices. This could save IBM system users a lot of money.

If the rumors about price are correct, Sun seems to be enjoying premium position as a seller. The offering price per share has been variously reported to be between $8 and $11 per share. At the top of that range, a total of $6.5 billion, the price would be about double the current stock share value of Sun. Even at the bottom of the range, the premium is fairly high for a company that lost $1.8 billion dollars last year after sales fell 11 percent.

Still, it might be worth it for IBM to spend a little extra on the company that has built and perfected this storage technology. If they are going to lose the revenue that they are currently getting by replacing legacy storage, they may as well lose it to themselves. Buying Sun would allow IBM to upgrade their own offerings, essentially keeping all those system to themselves for a while longer.

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Entry was posted on Sunday, March 22nd, 2009 at 2:52 pm under Legal, Storage, Technology.

Read more entries by Michael W. Jones.
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