03:14 PM

A HP-Sun combination starts making sense...

by Tom Foremski for SiliconValleyWatcher

If Hewlett-Packard and Sun Microsystems were to merge, it would make a lot more sense these days than a year ago. And the fit doesn’t look too bad either…take a look:

+HP would get Sun’s range of SPARC systems and an impressive future technology roadmap for SPARC microprocessors. IBM has been doing very well with its proprietary 64-bit Power microprocessor architecture. Margins on proprietary hardware are four to five times better than on industry standard systems. Itanium was supposed to be HP’s “Power” play but its slow market build has been further slowed by AMD’s 32/64-bit Opteron.

+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, such as HP’s.

+HP would gain Sun’s middleware, v.important against IBM’s WebSphere middleware. (BTW a HP-SUN-BEA-EDS combination would be interesting…)

+Both companies could consolidate their computer labs.

+The HP printer group could be spun off more easily, if necessary. Ditto HP PC group…

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

+A lot of the leadership/exec issues have gone away (Carly.)

Also, Intel, with its strong HP relationship would get an inside channel into Sun which would be bad news for AMD's Opteron. Sun has been a large obstacle to Intel's Itanium efforts--it's probably too late to do anything about that--but there would be potential client-side product opportunities for Intel's other chips.

But who would run an HP-Sun? Zander was made for that job, but he's busy at Motorola. Gary Bloom might be looking for a new gig soon. Who else? There doesn't seem to be much exec talent coming up through the ranks in the enterprise space, or is it just my perception? A HPQ and SUNW combination would require a star CEO, someone with considerable presence on and off stage. What about Ballmer? That would be interesting...

Hold on, I'm forgetting Sean Maloney at Intel--he's a real firecracker. Andy Grove's favorite son (metaphorically) and he has the toughest job at Intel--making the comms group profitable. He's the guy Intel uses to fix tough problems. He is Silicon Valley's Mr Wolf (for Pulp Fiction fans....)

Sean is in his 40s and he's already proved himself many times over at Intel. Paul Otellini is taking over from Craig Barrett this year, which means no room at the top for probably the next five to eight years. What’s a boy to do?