According to a report this morning in "The Wall Street Journal," IBM is in secret talks to buy Sun Microsystems for at least $6.5 billion in cash. The deal would create a powerful alternative to Microsoft in the datacenter with product lines that favor open source solutions, UNIX, and Java over Windows Server solutions.
While the companies' products lines are generally complementary, IBM and Sun come from starkly different cultures. IBM is the last of the East Coast computer giants, an old-school company with roots that date back to 1896, when it was the Tabulating Machine Company and created punch card-based systems. Sun, meanwhile, was a high-flying Silicon Valley startup founded in the 1980s that first jumpstarted the workstation market and then saw new success during the Dot Com boom of the early 2000s. Since then, however, Sun has fallen on hard times as high-end workstations and servers have become commoditized and it has pushed a variety of initiatives, including--gasp--even Windows-based systems.
Sun allegedly approached a number of high-tech companies in the past year with an eye toward being acquired. HP turned down such a transaction. But IBM jumped at the offer, and while the deal would be the biggest acquisition in its history, it would also strengthen its position against HP. Each of these companies--IBM, HP, and Sun--compete in the market for UNIX-based workstations and servers.
While the deal could go through as soon as this week, there's always the possibility that talks will fall apart as well. Neither company is willing to discuss the matter.