Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

A HP/Sun combination makes sense...and so does Zander at the helm

Posted by Tom Foremski - July 18, 2005

. . .fantasy corporate mergers

By Tom Foremski for SiliconValleyWatcher

HP-Sun.gifIn February I argued that a Hewlett-Packard/Sun Microsystems combination makes sense, [BTW way more than Symantec-Veritas] - and with extensive HP cutbacks/layoffs looming, it makes even more sense now.

By themselves, those two companies don't have enough to compete against IBM. Together, they have plenty of synergies, let me recap:

+HP would get Sun’s range of SPARC systems and an impressive future technology road map for SPARC microprocessors. This is a great challenger to IBM and its proprietary 64-bit Power microprocessor architecture. Margins on proprietary hardware are four to five times better than on industry-standard systems.

+HP would gain from Sun’s large accounts in financial services and telecoms. These sectors are huge IT spenders.

+Sun needs a much stronger services arm, and HP has a strong IT services group.

+HP would gain Sun’s middleware, v.important against IBM’s WebSphere middleware.

+Both companies could consolidate their computer labs.

+It would be easier for HP and Sun to spin out business groups, such as HP's PC group.

+Sun’s Java technologies have consumer electronics and mobile phone applications and momentum.

There's more but you get the picture.

The culture of the two companies is different, but it could be made to work by making it into a West Coast versus East Coast (IBM) type of thing.

The leadership issue could be resolved if Ed Zander, now at Motorola, but former president of Sun, came in to run the combined company, with Scott McNealy as chairman and Mark Hurd as president. [Mr Zander was approached to run HP, just before Carly Fiorina was appointed.}

That would make for a powerhouse company, imho.

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