August 2nd, 2004
Is Schwartz pulling IBM's chain?
Jonathan Schwartz is earning his paycheck again. Sun’s president and COO is using his blog and interviews with CNet’s Stephen Shankland and the Wall Street Journal to suggest that he’s interested in acquiring Novell for its SuSE Linux distribution.
Schwartz’s blog:
IBM is in a real pickle. Red Hat’s dominance leaves IBM almost entirely dependent upon SuSE/Novell. Whoever owns Novell controls the OS on which IBM’s future depends. Now that’s an interesting thought, isn’t it?
But if IBM preemptively acquires Novell/SuSE, the world changes: Linux enters the product portfolio of a patent litigator not known for being a social-movement company. But where else will IBM go? With it’s current market cap, Red Hat seems unacquirable - but absent action, IBM’s core customers will be eroded by Red Hat’s leverage. And Sun’s ability to leverage our open Solaris platform (on industry standard AMD, Intel or SPARC), or Java Enterprise System, even on IBM’s hardware, gives us a significant - and sustainable - competitive advantage. With the demise of AIX, IBM is once again vulnerable.
Me, I’d keep a close eye on the Novell/SuSE conversation. If IBM acquires them, the community outrage and customer disaffection is going to be epic… but where else does IBM go?
Schwartz to Shankland:
"With our balance sheet, we’re considering all our options. What would owning the operating system on which IBM is dependent be worth? History would suggest we look to Microsoft for comparisons."
The game goes this way: IBM has been Microsofted again by RedHat, so now it’s time to invest in SuSE before Big Blue has a chance to blunt RedHat’s control of the Linux market.
But why pay real money when you can disrupt your competition by driving up Novell’s price and exposing IBM’s soft underbelly. You get to be the good guy just in time for LinuxWorld without a keynote or having to endure the same old media questions about open sourcing Java, and IBM still has to deal with Novell at an even higher premium. Not bad for a day’s blog work.
