A tech industry group largely made up of IBM rivals says a
merger between Big Blue and Sun Microsystems would be harmful to
competition in the IT industry and lead to higher prices for
software and hardware.
"If this merger is announced, it will require careful, extensive
review by antitrust authorities because of the wide range of
products both companies now produce," said Ed Black, CEO of the
Computer & Communications Industry Association, in a
statement.
CCIA is a D.C.-based lobby group whose member includes
Microsoft, Google, and Advanced Micro Devices, as well as mainframe
maker T3 Technologies.
Black said that an IBM takeout of Sun would reduce consumer
choice and hit buyers of IT equipment in the pocketbook. "IBM and
Sun have been fierce competitors for years. A merger would
eliminate a key competitor, which affects choices and prices down
the line on numerous IT products," said Black.
Sun and IBM are both significant players in the market for
servers and business software. CCIA noted that European authorities
are investigating IBM for possible antitrust violations in the
market for mainframe systems.
The Wall Street Journal and New York Times reported Wednesday
that IBM and Sun were in talks over a possible $6.5 billion
acquisition deal. Investors pushed up Sun's stock price by almost
80% on word of the negotiations.
An IBM spokesman dismissed the reports as rumor but didn't deny
the speculation outright. "All I can tell you is that we don't
comment on rumors," said the spokesman. Sun representatives did not
respond to a call seeking comment.
Sun's proprietary hardware business has all but dried up in the
face of competition from commodity players such as Intel and
Dell (Dell), and it's struggling to keep pace with larger players
in the software business, such as Oracle, Microsoft, and IBM
itself.
Yet the company retains key, widely-used assets, including the
Solaris operating system, the open source MySQL database -- which
boasts more than 11 million installations -- and the Java
programming language. "Java would factor hugely in IBM's interest
in Sun," said Allan Krans, an analyst at research firm Technology
Business Research.
IBM doesn't charge for open source software directly, instead
bundling it with lucrative services and consulting engagements. The
business model represents a threat to pure play software vendors
like Microsoft and Oracle. Adding Sun to the mix would serve to
extend IBM's dominance in the market for so-called middleware that
businesses use to connect a vast range of computing devices.
IBM's net income jumped 12% in the most recent fourth quarter,
to $4.43 billion.