If IBM and Sun merge, watch out Oracle and SAP

IBM and Sun Microsystems are said to be in acquisition talks, and if such a deal actually happens, it could change the course of not only IBM's but Oracle's and SAP's use of Java.

The Wall Street Journal reported on Wednesday that IBM and Sun are in discussions that could see Big Blue ponying up $6.5 billion to get Sun's servers, storage, open source software, and, of course, its crown jewel: Java.

“People view this as a merger of two hardware companies, but the software is a bigger aspect that may change IBM and other large software companies,” said Ian Finley, a vice president at AMR Research.

Michael Cote, an analyst at RedMonk, pointed out that IBM controlling Java “could be something people who depend on Java will freak out about.”

AMR's Finely added, “If IBM enforces control over the Java Community Process the way Microsoft controls .Net, and WebSphere becomes perceived as better middleware because of it, then IBM gets an inherent advantage. Plus, it could de-stabilize the foundations of Oracle and SAP's products because Oracle's Fusion and SAP's NetWeaver are both tightly wedded to Java.”

Such divisive action, however possible, would not happen easily or quickly. Java's community process could hamstring any efforts by IBM to wrangle too much control of Java standards, said Al Gillen, program vice president for system software at IDC. “In a community-based environment, if IBM does something with Java the community doesn't like, members can fork Java,” Gillen explained. “I think IBM gets that.”

RedMonk's Cote pointed out that Java stewardship would be a fine line for IBM. “At first, IBM wouldn't be so interested in kicking sand in people's eyes because its hardware sales are often tied to Oracle,” Cote said.

Although AMR's Finley expects IBM to say publicly that it wouldn't de-stabilize Java, the company would definitely want to get the most competitive advantage out of its $6.5 billion as it possibly could. And it wouldn't take much to get SAP and Oracle shifting gears.

“Even a subtle tilting of the playing field could drive SAP and Oracle to shift their focus. Oracle's applications franchise is being built on Java. The same would apply to SAP and NetWeaver,” Finley continued. “They'd have to take evasive action and turn to other standards.”

Now, it's still too early to tell whether such a deal will even reach a shareholder vote, let alone pass antitrust regulators. Neither company has publicly stated that the talks are even taking place.

“We don't comment on rumors, no matter how accurate or silly they may be,” Sun chairman Scott McNealy responded in an e-mail to an InfoWorld inquiry about the reports.

Whereas large corporate mergers are often regarded as failures, RedMonk's Cote doesn't foresee that happening here.

“IBM is actually very good at execution. If you combine Sun and IBM, and it doesn't kill the Siamese twin, it could be interesting to watch.”