IBM - Sun Deal Creates Opportunities for Dell

sources: reuters

Michael Dell says uncertainty about Sun-based servers could push some towards x86-based servers

The poor global economy has sent many technology firms scurrying to try to shore up operations and ensure profitability. For many companies large and small, mergers may be the way to prevent them from going under.


According to a report from The Wall Street Journal, IBM is in talks to acquire Sun Microsystems in a deal reported to be worth a total of $8 billion. The WSJ reports that the deal would have IBM paying at least $6.5 billion in cash and the deal would include $1.4 billion in cash on Sun's balance sheet.

The possibility of a Sun buyout has Michael Dell, CEO of Dell computers excited at the opportunities the proposed deal will create. At a Briefing in Tokyo, Reuters reports that Dell said, "Just the rumor of IBM potentially purchasing Sun creates an enormous opportunity because all of the Sun accounts are very concerned what will happen to the Solaris platform and Sparc microprocessor."

Dell believes that the rumor of a sale will be enough to push many enterprise customers using Sun processors and operating systems into migrating to x86-based servers. One of the best product segments for Dell is x86 servers, so the potential for new business for the computer maker is high.

Dell has a fight building in the server market with Cisco Systems announcing that it would be getting into the server market and HP now offering a more complete services package thanks to its purchase of EDS.

Dell is currently behind both IBM and HP in the server market reports with a market share of around 12%. If users of Sun-based server systems begin migrating to x86-based machines, it could give Dell the boost it needs to close the gap on the leading server companies.