Information technology - Gathering clouds: The takeover talks between IBM and Sun highlight a shift in the industry
Posted in: Miscellaneous at 22/03/2009 09:44
It was the day Sun Microsystems was supposed to rise again. On March 18th the Silicon Valley computer-maker had planned to unveil a new online service to allow start-ups to manage with much less hardware, by buying computing capacity from a "cloud", rather like electricity from the grid. But the event was overshadowed by the news, hours earlier, that IBM was in talks to buy Sun for at least $6.5 billion in cash, which would translate into a near-100% premium over the firm's depressed share price in recent weeks.
As The Economist went to press, a deal had yet to be confirmed. But it is no surprise that the two firms are talking. The economic crisis has pummelled Sun, which never really recovered from the dotcom bust. As its share price plumbed new lows, IBM's remained relatively unscathed -- a reflection of its business, which has been protected by the computer giant's global scope and the fact that it makes most of its money from software and services.