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Technology Stocks : IBM

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To: ToySoldier who wrote (4299)	11/30/1998 3:12:00 PM
From: rudedog	Read Replies (1) of 8218

Toy - The theory goes something like this - only 2 or 3 Unix versions can get critical mass in the high end, because the development community will increasingly consolidate around volume platforms for application development. HP-UX is assured traction because of HP's co-development of Merced with Intel. Intel has been pushing Sun (pretty successfully) to support the merced architecture. Solaris already has the largest base of applications and will increasingly be the development platform and first choice to market for developers. IBM needs to either get AIX to be the #1 or #2 Unix (not likely) to keep the development community on board. Another choice would be to do a deal which gets Solaris onto the RS/6000. The second choice gives them immediate access to the large applications base, eliminates a very costly development effort (AIX), and allows them to use key technology that Sun does not have (such as the SP2 switch technologies) to create products which have a better value proposition than Sun can create. Other IBM products like DB2 would have a potentially larger customer base. I doubt that this move would open the door to Sun in strong IBM accounts - it is much more likely that IBM could move into Sun accounts with a better overall enterprise story, strong database products, better clustering technology, and a great interoperability play. Gartner and other analysts have explored this idea. The economics are reasonable and it could be a good play if done right. I have a number of data points on this but nothing conclusive. I will be interested in what you can turn up. P.S. why would Sun open the door to IBM in Solaris accounts? The answer there is 'the enemy of my enemy is my friend'. Building traction for Unix and raising the bar to NT is more important. The more platforms which consolidate around a common base, the better. Sun would assume that the whole pie will grow fast enough to offset any potential losses in specific Sun accounts, and the expanded Solaris customer base would generate more interest from developers, and keep NT from eroding the low end and midrange of Sun's business, or at least slow that erosion.

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