It’s the talk of the IT industry this week, whether you’re in servers, software, or storage–the Wall Street Journal report that IBM is in talks to acquire Sun for — let me write this out — six point five biiiiiiiiiiiilllion dollars. Also known as a 100% premium on current Sun valuation.
I know storage isn’t the major focus of the deal, and it’s more likely driven by Hewlett-Packard, Dell and perhaps server newcomer Cisco putting pressure on IBM’s other divisions. But when it comes to storage, if this merger does take place, all I can see right now is a hot mess. A hot mess with tentacles, even.
It’s not just that both IBM and Sun have less-than-ideal track records when it comes to assimilating recent large storage acquisitions–i.e. Sun’s $4.1 billion attempt to swallow StorageTek and last year’s smaller debacle with IBM’s XIV product. Or that, as former Sun evangelist and current consultant with Capstone Technology Taylor Allis put it, such a merger would represent a culture clash–“East Coast company with its strength in business acumen meets West-Coast Bermuda shorts technology innovation.”
As far as storage goes, one of Sun’s strongest revenue streams is the declining tape market. But what really catches my attention about this possible merger is the tangled web of conflict it would create in the rest of the storage market.
Two major problems stand out immediately, though one of them is the granddaddy of the other. First there’s the matter of high-end disk arrays to consider. IBM has been knocked for its lack of innovation in its DS series of arrays, but has also steadfastly insisted it’s going to keep selling them. There’s already some positioning to work out in the portfolio between the DS series and XIV, and if this merger goes through, you can throw Sun’s longstanding partnership with HDS for high-end disk arrays into the mix. Analytico’s Tom Trainer suggested to me once that IBM may consider OEMing a product from one of its rivals in high end storage, but would they really do such a thing?
Whether they do or don’t sell HDS, there would most assuredly be a struggle over which direction to go. While we’re at it, what of FalconStor, still a partner to Sun for VTL but dropped by IBM in favor of Diligent? “They would have to have colossal arguments,” said Allis. “Between the mix of cultures and a lot of product overlap, it would be a long, painful road.”
But the really big storage elephant in the room here is NetApp.
IBM OEMs practically NetApp’s entire product line as the N series. NetApp claims Sun steps on its WAFL toes with ZFS, and there’s an ongoing lawsuit over the matter. If IBM acquires Sun, does NetApp sue its own best partner? Does IBM drop NetApp? Does IBM attempt to make Sun and NetApp play nice together? Would acquiring Sun amount to IBM taking a position in the copyright fight, where Sun already claims to be winning?
Are any of those scenarios particularly palatable, especially for customers who are invested in IBM’s N-series precisely because it has the IBM brand associated with it, and therefore ostensibly an assurance that IBM would stand behind that product?
Regardless, those considerations probably will be subsumed in favor of the potential combination of OpenSolaris and ZFS with the “software mainframe” idea VMware has been advancing. It’s no secret IBM is enamored with the cloud, and will need a strong strategy and offering in that space. “The embedded storage capabilities in ZFS like software RAID baked into the operating system are similar to DFSMS in the mainframe world,” Allis pointed out. And at least one partnership deal could be simplified in the merger, as both IBM and Sun OEM LSI storage.
Far be it for me to question the value of the software mainframe. That’s not my beat. But if this deal goes through, the storage industry had better buckle up.