IBM Is Just Not That into a Deal with Sun

By Jessica Davis  |  Print this article Print

IBM is not interested in buying Sun at any price, reports say, and other potential suitors such as HP, Cisco, Intel and Dell are unlikely to come in as a white knight. So where does that leave Sun's reseller channel partners?

Sun Microsystems (NASDAQ:JAVA) reseller channel partners briefly enjoyed a few moments of hope on news yesterday that Sun had asked former suitor IBM (NYSE:IBM) back to the bargaining table to talk about a potential acquisition.

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But yesterday CNBC reported that IBM told Sun it was uninterested in resuming deal talks and was not interested in buying Sun at any price. And while other suitors have been named as potential white knights for Sun—Cisco (NASDAQ:CSCO), HP (NYSE:HP), Intel (NASDAQ:INTC) and even Dell (NASDAQ:DELL)—the CNBC report said that none of these was coming to Sun’s rescue.

Bloomberg news also reported that Cisco CEO John Chambers said yesterday that if Cisco had been interested in buying Sun, Cisco would have done it already.

A glimmer of hope remained yesterday, however, as Sun’s stock price still held fast, between $6.25 and $6.50, even as trading resumed today, rather than falling to pre-deal levels in the $4 range. That shows that investors believe a deal still may be possible.

The uncertainty more than anything has made business tough on Sun Microsystems’ loyal channel partners since news of the potential IBM deal first leaked out.

Mike Clesceri, a partner and executive vice president at Chicago-area Sun reseller and solution provider Laurus Technologies, says that Laurus’ customers are asking about the future of Sun technology and whether it’s safe to buy.

"For this quarter being up in the air is the biggest worry," says Clesceri. "There are companies out there that Sun has had to defend its viability to."

And when the acquisition talks were on, customers were concerned if the core pieces of technology they purchased from Sun would survive any acquisition, says Clesceri. Now customers and partners are concerned over speculation in the market that if Sun doesn’t do a deal, the company is dead.

Clesceri was one of many Sun partners who stood to gain if the IBM/Sun deal went through. He says such a deal opened up many more potential customers to him to sell solutions based on Sun’s Solaris Unix operating system and other products from Sun.

Laurus is considered a Sun-only partner by Sun in Sun’s reseller channel partner program. As such a partner, Sun can’t sell products from what Sun considers its major competitors, including IBM, HP, EMC and NetApp. In return Laurus gets preferential treatment in terms of partner benefits.

Because of the Sun-only partner designation, a company like Laurus would stand to gain significantly through a merger with IBM.

"Whenever I have more solutions to sell to my customers, it’s only good for me," says Clesceri. "The IBM/Sun deal would have just given me more to sell."

In addition, Clesceri says the potential exists for more platforms to support Solaris, another benefit his company. Now those bets may be off.

However, in spite of the uncertainty, Clesceri says Laurus continues to grow and the company ended its first quarter with "significant growth quarter over quarter."

"The customers who didn’t need to spend money stopped spending money awhile ago," Clesceri says. "The people who need to buy, need to buy."


Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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