Bad Idea: Google to Buy Sun?
From the NY Times' "DealBook" today. I think this is a very bad idea -- any enterprise hardware company struggles with launching a physical platform and sustaining that in the marketplace. A "pure" software company like Google can, in some instances, turn on a dime when a "platform" or new idea doesn't quite catch fire. Sun cannot -- you're stuck with millions of dollars worth of product that you have to sell or get rid of somehow. After all, if Google Mars isn't a hit, no one really cares. But if Sun's new "Enterprise 5000z" servers are not a hit, it's a big blow to the bottom line. Sun is a hardware company -- that's how they make their money (like Apple) -- and Google has no business playing there. Okay, here's the story:
Talk of an imminent sale of Sun Microsystems to Google has been swirling around trading floors and Silicon Valley for more than a week. Shares of Sun, which has a partnership with Google to develop and distribute each other’s technology, spiked up about 4 percent last week as a result of the rumors. The speculation got even more legs after Google purchased Writely, a maker of a Web-based word processor that some people viewed as a product to be added to Sun’s StarOffice suite, which Google may help distribute. It’s also convenient that Eric Schmidt, Google’s chief executive, is the former chief technology officer of Sun.
However, according to people involved in the partnership,the speculation is unfounded — at least for now.
The better question then may be: should Google buy Sun? DealBook’s take: It clearly comes with a lot of baggage. Google might do better just picking off its different software platforms, like Java.
But here’s another view, from from Daniel M. Harrison’s blog:
Anyone who thinks Google can continue its phenomenal growth without a platform to combine hardware, storage, StarOffice, JAVA, and Solaris ought to think again — the combinations are the only competitive advantage that can enable them to trade at a P/E of 100 — and perhaps way above. Indeed, this was exactly what happened in 2000: too many technology companies relied purely on supposed revenues derived from ‘wandering customers’, rather than delivering the hard substance that drove the bottom line exterior to trends of marketing and advertising. Sun’s growth potential is what Google may well be looking to acquire — and that is largely stored in intellectual property, where Google hold their key competitive advantage: translating exactly this kind of property into cold cash.
Talk of an imminent sale of Sun Microsystems to Google has been swirling around trading floors and Silicon Valley for more than a week. Shares of Sun, which has a partnership with Google to develop and distribute each other’s technology, spiked up about 4 percent last week as a result of the rumors. The speculation got even more legs after Google purchased Writely, a maker of a Web-based word processor that some people viewed as a product to be added to Sun’s StarOffice suite, which Google may help distribute. It’s also convenient that Eric Schmidt, Google’s chief executive, is the former chief technology officer of Sun.
However, according to people involved in the partnership,the speculation is unfounded — at least for now.
The better question then may be: should Google buy Sun? DealBook’s take: It clearly comes with a lot of baggage. Google might do better just picking off its different software platforms, like Java.
But here’s another view, from from Daniel M. Harrison’s blog:
Anyone who thinks Google can continue its phenomenal growth without a platform to combine hardware, storage, StarOffice, JAVA, and Solaris ought to think again — the combinations are the only competitive advantage that can enable them to trade at a P/E of 100 — and perhaps way above. Indeed, this was exactly what happened in 2000: too many technology companies relied purely on supposed revenues derived from ‘wandering customers’, rather than delivering the hard substance that drove the bottom line exterior to trends of marketing and advertising. Sun’s growth potential is what Google may well be looking to acquire — and that is largely stored in intellectual property, where Google hold their key competitive advantage: translating exactly this kind of property into cold cash.
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