Lucky for me, I had already had the morning coffee when I read that Schwartz -presumably as a big joke, but you can’t tell with his dry humor – said Sun was still on an acquisition binge and that, get this, Sun was interested in buying IBM Corp’s server business.
With what, Jon? Bill Gates’ money? The gross domestic product of a small European country?
Let’s think about this for a second, just for fun. Nearly all of IBM’s revenue is derived directly or indirectly – and mostly indirectly – from its server business.
Big Blue sold off its disk drive and PC businesses recently and has long since ditched its printer, terminal, networking, and application software units. The vast majority of IBM’s middleware and operating system sales come from its own server lines, although Big Blue does sell software on other people’s iron, particularly in the Linux and Windows markets, sometimes in the Unix space. Ditto for services: the majority of IBM’s services revenues is on IBM iron, but a larger percentage of services have to do with integrating disparate systems, to be fair, or providing services that are not tied specifically to any piece of iron or architecture.
Still, most of the value of IBM’s $121bn market capitalization comes from – again, either directly or indirectly – its server business. It is hard to imagine IBM not having a value of at least $250bn in any acquisition – if not more. And Sun, which has one-tenth of the market cap of IBM and only a few billion bucks in cash, has no way of acquiring even a piece of IBM’s server business. Period.
What Sun needs to acquire is a line, and then place it on the floor, and then teach Schwartz not to step over it when he speaks. While Schwartz has talked up a large number of good ideas in his short tenure as the number two exec at Sun, this idea is just plain laughable.
