Spring drama with Sun and the big Blue yonder

There has been much speculation on the talks that IBM and Sun Microsystems aren’t officially having, ever since word leaked out that they weren’t officially having them.

Now the deal may have turned sour. If due diligence rather than just price slowed the IBM acquisition talks with Sun Microsystems, trying to sort everything out may have made IBM drag its feet. The Wall Street Journal reported March 20 that IBM was researching Sun’s business contracts in standard preparation for a possible merger, and said the research was expected to take “a number of days.” Weeks later, speculation on both corporations’ continued reticence pointed to potential intellectual property entanglements.

Both IBM and Sun’s portfolios contain open-source and commercial licenses as well as third party patent and cross-licensing deals. Of particular interest is an agreement Sun forged with Microsoft in 2004, ending a lawsuit over Java software. Sun had brought suit alleging that Microsoft maintained an illegal monopoly in the “worldwide market for Intel-compatible PC operating systems,” and also that Microsoft distributed “source code in the Java platform” outside a license that Microsoft received from Sun. After the private anti-trust lawsuit ran into Estoppel, Sun struck a deal, netting $700 million for dropping the Java suit against Microsoft, and $900 million for a patent-sharing agreement that could be extended for up to ten years. Whether in shrewd observation or sour grapes, Microsoft now wonders why IBM would even want Sun.

IBM, whose software business depends heavily on Java, would need to carefully dissect this agreement and others before continuing with acquisition, even if the price is right. IBM has not returned calls to comment on this, and the implication for the localization industry if the deal does or doesn’t go through is unclear as well. Most everyone I’ve chatted with so far seems to assume that either way, it would be more or less business as usual.


Katie Botkin
Katie Botkin is a freelance writer. She has a master’s degree in English with an emphasis on linguistics and has taught English on three continents.

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