IBM Savors Oracle-Sun Delay

A couple of IBM execs give their unvarnished views of the merger.
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By Dana Gardner, principal analyst for Interarbor Solutions

You have to know when to hold them, and when to fold them.

That's the not just slightly smug assessment by


(IBM) - Get Report

executives as they reflect -- with twinkles in their eyes -- on the



acquisition of

Sun Microsystems

, a deal that

IBM initially sought

but then

declined earlier this year


Chatting over drinks at the end of day one of the

Software Analyst Connect 2009

conference in Stamford, Conn., IBM Senior Vice President and IBM Software Group Executive Steve Mills told me last night (Tuesday) he thinks the

Oracle-Sun deal

will go through, but it won't necessarily be worth $9.50 a share to Oracle when it does.

"He (Oracle Chairman

Larry Ellison

) didn't understand the hardware business. It's a very different business from software," said Mills.

Mills seemed very much at ease with

IBM's late-date jilt of Sun

(Sun was apparently playing hard to get in order to get more than $9.40/share from Big Blue's coffers).

IBM's stock price

these days is homing in on $130, quite a nice turn of events given the global economy.

Sun is

trading at $8.70

, a significant discount to Oracle's $9.50 bid, reflecting investor worries about the fate of the

deal now under scrutiny


European regulators

(the EU on Friday extended the antitrust review deadline to Jan. 27), Mills' views notwithstanding.

IBM Software Group Vice President of Emerging Technology

Rod Smith

noted the irony -- perhaps

ancient Greek tragedy

-caliber irony -- that a low market share

open source

product is holding up the biggest commercial transaction of Sun's history. "That open source stuff is tricky on who actually makes money and how much," Smith chorused.

Should Mills' prediction that Oracle successfully

maintains its bid

for Sun prove incorrect, it

could mean bankruptcy

for Sun. And that may mean many of Sun's considerable intellectual property assets would go at fire-sale prices to ... perhaps a few piecemeal bidders, including IBM. Smith just smiled, easily shrugging off the chill (socks intact) from the towering "IBM" logo ice sculpture a few steps away.

And wouldn't this

holdup go away

if Sun and/or Oracle jettisoned


? Is it pride or hubris that makes a deal sour for one mere grape? Was the deal (and $7.4 billion) all about MySQL? Hardly.

Many observers think

that Sun's Java technology -- and not its MySQL open source database franchise -- should be of

primary concern


European (and U.S.) antitrust mandarins

. I have to agree. But Mills isn't too concerned with Oracle's probable iron grip on Java ... err licensing. IBM has a long-term license on the technology, the renewal of which is many years out. "We have plenty of time," said Mills.

Yes, plenty of time to make

Apache Harmony

a Java doppelganger -- not to mention the Java market-soothing effects of



Eclipse RCP

. (Hey, IBM invented Java for the server for Sun, it can reinvent it for something else ...


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Unlike some software titans, Mills is clearly not living in a "reality distortion field" when it comes to Oracle's situation.

"We're in this for the long haul," said Mills, noting that he and IBM have have been competing with Oracle since August 1993 when IBM launched its distributed


product. "All of our market share comes at the expense of Oracle's," said Mills. "And we love to do benchmarks again Oracle."

Even as the fates seem to be on IBM's side nowadays, the stakes remain high for the users of these high-end database technologies and products. It's my contention that we're only now entering the true

data-driven decade

. And all that data needs to run somewhere. And it's not going to be in MySQL, no matter who ends up owning it.

At the time of publication, Gardner had no positions in stocks mentioned in this article.

Dana Gardner is president and principal analyst at Interarbor Solutions, an enterprise IT analysis, market research, social media publishing, and consulting firm. Gardner, a leading identifier of software productivity trends and new IT business growth opportunities, honed his skills and refined his insights as an industry analyst, pundit and news editor covering the emerging software development and enterprise infrastructure arenas for the last 16 years. Gardner tracks and analyzes a critical set of enterprise software technologies and business development issues: cloud computing, SOA, BPM, BI, Web services, application development tools, and application lifecycle optimization techniques. His specific interests include enterprise infrastructure and processes, developer tool advances and trends, embedded software advances, infrastructure outsourcing and utility usage trends, SOA infrastructure and integration developments, and open source development and deployment initiatives. Gardner is a former senior analyst at Yankee Group and Aberdeen Group, and a former editor-at-large and founding online news editor at InfoWorld.