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  1. Technology
October 2, 1991


By CBR Staff Writer

Sun Microsystems Inc’s SunSoft duly signed a letter of intent late last Tuesday to acquire the Intel-Unix side of Interactive Systems Corp from Eastman Kodak Co (CI No 1,768). The signing was delayed slightly by the time involved rounding up all the executives needed to bless the essentially four-party deal. What SunSoft is getting is Interactive’s Systems Products Division, the arm that develops and markets software for Intel Corp iAPX-86 machines, a 200-person business said to be doing $30m a year. It is leaving behind Interactive’s Service & Technologies Division, the equally valuable custom software and consulting unit that will soldier on as Interactive. Instead, SunSoft will be licensing certain some technologies from the Service and Technologies Division as well as Kodak’s Photo CD and electronic imaging wizardry. The companies declined to identify exactly what black arts these are. However, one Interactive official ventured that it involved everything they need to do an implementation of the Solaris version of SunOS for Intel kit. SunSoft expects the acquisition to accelerate its time-to-market with Solaris-on-Intel and help leverage it into the number two slot behind Microsoft Corp in the operating systems game. Interactive’s motive in being acquired is simply to continue as a player, a position it doubtless would have forfeit somewhere down the road had it gone on alone. Informed sources said a secondary incentive impelling the pair’s courtship, which apparently began in earnest round about July, was their detecting a mating dance going on in parallel between Novell Inc and Unix System Laboratories Inc (CI No 1,769). Some circles have concluded that Novell, on its own competitive track with Microsoft, would like to own Unix and may attempt to buy Unix Labs or at least control a bigger piece of it than its current 14%, a combination SunSoft and Interactive must position themselves against. SunSoft for its part at least wants to harness Novell’s considerable distribution clout behind Solaris, an outstanding issue still on the agenda. The scenario is interesting for Unix Labs since it plays to its notions of becoming a BIG company, without seeming to alienate existing customers. Although SunSoft is acquiring Interactive’s people and business, who exactly that involves still hadn’t been decided last week – and that includes Ajit Gill who runs the division and Ron Lachman, who is regarded as the architect of the deal. However, collaboration on Solaris-for-Intel began in advance of the agreement in principle and that piece of paper will now enable the companies’ separate development teams to be combined. Both companies were reluctant to detail product strategy before the acquisition is complete. For the time being it appears that Interactive will continue to distribute Unix System V.3.2 and act as Unix Labs’ principal publisher for System V.4. However, down the road, a migration policy will kick in to move Interactive’s customer base over to Solaris, a re-direction Unix Labs top management, privy to the discussions, has signed off on. The Interactive takeover automatically propels SunSoft to number two position in the Unix-Intel market after the Santa Cruz Operation Inc, whose 55% share, as counted by International Data Corp, is now jeopardised by the entry of a larger financially resourceful competitor – although Santa Cruz of course has moneybags Microsoft hovering in the shadows with its 20% – or whatever it is – shareholding. As part of its dowry, Interactive brings SunSoft an installed base of close to 100,000 and unfilled government orders of around 120,000 units.

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