Re: Sun takes a hit

From: John Smith (a_at_nonymous.com)
Date: 10/07/03 

Date: Tue, 07 Oct 2003 16:05:35 GMT

Bob Koehler wrote:
> In article
> <5qpgb.244170$Lnr1.224370@news01.bloor.is.net.cable.rogers.com>,
> "John Smith" <a@nonymous.com> writes:
>
>> So what's stopping HP from digesting Sun?
>
> Why would HP want to buy a company that only has one product? Sun
> prides itself on, and attracted a lot of customers because of, only
> doing UNIX. HP has a strong UNIX, they don't need another.
> Features HP said they wanted to add to their UNIX, they got with
> Tru64.
>
> Sun grew up with, and will die with, the UNIX market. For the last
> decade and a half that's been a good market to be in. Sun's
> biggest problem is that someday Solaris will be as usefull as a
> typewriter is today. Typewriters hung around for several decades,
> but those companies who had them as their sole product are gone
> now.

Which division of Compaq did HP really want? None really, except perhaps
Services/Consulting - which they had desperately trying to strike a deal on
with any credible partner for several years before the Compaq deal.

In the end what HP really wanted to do was take a competitor off the market.
Compaq was stupid/desperate enough to be on the market and available with
management's complicity. On the other hand, Sun would currently be a hostile
takeover candidate - but who cares if you are going to sunset Solaris as a
possible organ donor too. McNeally will foam at the mouth with righteous
indignation but not holding much stock personally he, and the rest of Sun's
management will be at the mercy of the professional money managers who will
see a declining business and a sliding stock price - the pro's wouldn't
think twice about declining a hostile suitor offering a 15% premium to
market - they'd say "Can we accelerate the closing on this deal rather than
waiting 3 months for the ink to dry.".

Given the state of the computing market at the time the Compaq deal was
thought about, consumated, and still remains, HP would have, in all
likelihood, been as profitable or unprofitable today (depending on your
perspective) as it would have been without the Compaq deal.

All that's really changed is that HP sells more without really being any
more profitable - yet. HP has been able to strongarm (not the chip) its
suppliers for more favorable pricing, which will eventualy payoff in spades
when unit sales volumes increase.

And on the finance side, since they 'paid' for Compaq with paper (ie.
stock), the amount of debt they assumed with its concommitant servicing
requirement was negligible - as would a similar purchase of Sun.

So when the dust settles you'll have a 3-way boxing match:

1. Dell/Intel with Linux & Windows

2. IBM (Intel) and their own chips with Linux & Windows & Unix & other
proprietary o/s

3. HP/Intel with Linux & Windows & Unix and other proprietary o/s (for as
long as they last)

and a 4th dark horse.....

China Inc. w/ Linux & Windows & their forthcoming national standard o/s
which will eventually eclipse all others in installed base (so start
learning Chinese now if you want to have a job in the future),

and finally the myriad of brand-name Unisys et. al. and no-name
'white-boxes' running Linux & Windows.

All this is more than enough to keep the FTC happy in believing that there
is diversity in the market.

Relevant Pages

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