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More Merger Speculations

macktheknife

macktheknife

macrumors 6502a
Original poster
Jan 24, 2002
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Another article from the O'Reilly Network speculating on a number of mergers that might happen. Once again, the author is doing some pure speculating, but it does provide some food for thought.

http://www.oreillynet.com/pub/wlg/2677

As the economy and stock market continue to struggle for strong support and positive direction, look for some major Java camp players to make significant moves. Most of which will establish the trend of hardware vendors acquiring the struggling or, at least, challenged middleware/software vendors. Therefore, here are five potential Java industry mergers or acquisitions to watch for 2003 and 2004:

1. HP Acquiring BEA Systems
Hewlett-Packard is different from other enterprise server players like IBM and Sun. While IBM and Sun offer complete enterprise middleware/software solutions (Web app server, Java/XML/Web services IDE, DB) for its server customers, HP really does not, unless you count the now defunct Bluestone. Recently, HP partnered with BEA and Oracle to offer various middleware/software solutions with its servers. Some analysts and others have considered a Sun acquisition of BEA. That's not likely given Sun's poor finanical leverage in terms of cash and/or current market value in the equity market. Maybe, a merger is possible where Sun would stengthen its middleware offerings. However, HP will acquire BEA first if necessary before they would let Sun do anything.

2. IBM Acquiring Novell
IBM may acquire Novell. IBM's past ties to Novell in networking and as a recent distribution channel of WebSphere makes it the logical choice, especially as Novell augments its software offerings with new Java and Web services tools. Novell on its own will not make headway into the market, but it certainly offers potential ways to augment IBM's WebSphere solutions.

3. Dell Acquiring Sun
Looking at Dell's cash and strong equity market pricing per share versus Sun's lack of cash and relatively poor equity market pricing per share is an invitation to Dell to possibly acquire Sun Microsystems. In addition to Dell's financial leverage, Dell has been attempting to expand its market into the server-side arena. While Dell has made some in-roads into this arena, Sun already has established these ties with its current large business high capacity servers. Dell is also watching Sun's success in the small business arena with its Cobalt Linux servers. Such an acquisition would give Dell the tools and market share to succeed in the server-side business market. It would also eliminate competition as well. Then Dell would only have to worry about HP and IBM. In regards to the effects on Java, it would be interesting to see what Dell will do.

4. HP Acquiring/Merging with Oracle
If HP is not able to acquire BEA, they may find a way to acquire or at least merge with Oracle. Again, HP would like to own and control middleware and software solutions for its server hardware. While I believe that BEA is more likely to be acquired, Oracle does offer a database solution that BEA does not.

5. Sun Merging with BEA or Oracle
While there is merit for Sun to merge with either BEA or Oracle, politics, ego and the above make this the least likely to happen.

Others to Watch
Borland, Macromedia, and Adobe are other significant market players to watch: Look for Borland to merge/be acquired by either a hardware or a middleware vendor (i.e., BEA Systems, HP, and/or Oracle). Macromedia and Adobe could merge with Apple long-term as well. Time will tell.
Click to expand...
 
I can't really comment on the likelihood or the soundness of these mergers, but a fundamental shift in the technology industry has occurred, and it will force some consolidations. Technology and capital spending have gone down the drain, and customers are no longer willing to pay top dollar for software and hardware they don't need. In addition, customers are perfectly willing to pass on the "latest and greatest" software and hardware given that the old stuff works perfectly fine for what they do.

The most ominous shift for many tech companies, of course, is the emergence of open source software. Some companies like Sun are getting hammered. Others like IBM have embraced open source software, realizing that while software and hardware have (in some respects) become commodities, consulting services have not.

When I get home, I'll take a look at each company's financials to see which company is in the weakest/strongest financial position and do some of my own merger speculations from a financial analysis perspective.
 
I think that a merger between IBM and Apple should take place on a few conditions:

  • That Apple markets OS X primarily to consumers and education customers and IBM continues to market Linux primarily to businesses.
  • That IBM and Apple work together to find ways to make OS X and Linux more compatible with each other.
  • That IBM supports Apple financially and allows Apple to decide how to spend the money to market it's products. This is because IBM has never been good at marketing it's products to consumers anyway.
  • That IBM supplies most of the hardware that goes into Apple's computers, trying to find ways to make them faster and cheaper.
  • That Apple is allowed to keep the Apple and Macintosh brand names for its products.
  • That Apple is allowed to design the look of its computers and not IBM.

With that said, I think a merger between IBM and Apple will go just fine. IMHO, IBM is the future of the tech industry and Mac OS X and Linux will the primary OSs in use. Forget Micro$uck$ Windblows! :p

;)
 
Interesting post.

I think most of these are highly unlikely.

Looking at each of them in order:

1. HP will get killed by WallStreet if they try to swallow another company after Compaq. They need to focus on integrating Compaq for the next couple of years or so.

2. Novell is the walking dead. IBM is not that stupid.

3. Sun is also the walking dead. Linux running on Wintel has them crushed in every segment except for some tiny niche on the high end. Who is going to pay 100 grand for a server when you can get the same thing from Dell for 10K running Linux. Sun is screwed in my opinion.

4. No way Ellison will ever let it happen. Ego too big and wants to make a name for himself in his neverending pursuit of Bill Gates.

5. Maybe Sun and BEA, but I doubt BEA would do it. Oracle would not buy/merge with Sun and compete with the remainder of its channel--particularly with the state Sun is in.

As for Apple/IBM, that is not likely either. Apple doesn't need it, nor does IBM. Plus, the cultures are too different. All the "Pre-Merger Rules" suggested in the previous post won't offset the negative impact of the IBM culture on Apple's innovative spirit. Plus, a lot of people who work at Apple would never work at IBM, even the Apple division thereof.
 
Originally posted by BWhaler

As for Apple/IBM, that is not likely either. Apple doesn't need it, nor does IBM. Plus, the cultures are too different. All the "Pre-Merger Rules" suggested in the previous post won't offset the negative impact of the IBM culture on Apple's innovative spirit. Plus, a lot of people who work at Apple would never work at IBM, even the Apple division thereof.
Click to expand...

But if the stock price doesn't go up, if market share doesn't go up and decent profits are not made, then what else will Apple do? I can't think of a better company to sell to than IBM. ;)
 
Apple does not merge. Apple acquires. If Apple isn't big enough to acquire something, it leaves it alone. Apple/Adobe speculation has run rampant for as long as i can remember, it's just not going to happen until Apple can just buy them out.

:)
pnw
 
Originally posted by Shrek
I think that a merger between IBM and Apple should take place on a few conditions:

  • That Apple markets OS X primarily to consumers and education customers and IBM continues to market Linux primarily to businesses.
  • That IBM and Apple work together to find ways to make OS X and Linux more compatible with each other.
  • That IBM supports Apple financially and allows Apple to decide how to spend the money to market it's products. This is because IBM has never been good at marketing it's products to consumers anyway.
  • That IBM supplies most of the hardware that goes into Apple's computers, trying to find ways to make them faster and cheaper.
  • That Apple is allowed to keep the Apple and Macintosh brand names for its products.
  • That Apple is allowed to design the look of its computers and not IBM.

With that said, I think a merger between IBM and Apple will go just fine. IMHO, IBM is the future of the tech industry and Mac OS X and Linux will the primary OSs in use. Forget Micro$uck$ Windblows! :p

;)
Click to expand...
Wow of all the ironies!!! Big Blue and Apple as one company maybe 2004 will be alot like 1984:eek: :eek: :eek: :eek:
 
Originally posted by paulwhannel
Apple does not merge. Apple acquires. If Apple isn't big enough to acquire something, it leaves it alone. Apple/Adobe speculation has run rampant for as long as i can remember, it's just not going to happen until Apple can just buy them out.

:)
pnw
Click to expand...

this is probably the best assessment i have seen about the ever popular subject of apple/techcompany mergers. history can provide more information about the future than the present can.
 
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