RealTime IT News

Sun Said To Table Linux Purchase

Sun Microsystems has apparently backed away from its efforts to acquire a Linux software distribution -- for now.

The Santa Clara, Calif., network computer maker had been looking to augment its enterprise portfolio, sources told internetnews.com this week.

But internetnews.com has learned that preliminary discussions between top Sun and MontaVista executives became terse, stalling because MontaVista CEO Jim Ready may not be ready to sell.

"They are still in discussions, but people were telling me that Sun does not get the full value of MontaVista," a source familiar with the talks said.

So what is "full value" for MontaVista (if that is the indeed the sticking point)?

In a broad sense, the carrier-grade market is relatively untouched by the Linux companies and Microsoft , making MontaVista a good fit for Sun. Some analysts suggest that Sun is not able to go head-to-head on the server side -- enterprise or SMB customers -- with Red Hat and IBM and there's little chance they will be doing well on the desktop using MontaVista.

Still more pundits suggest that Sun could push into the VoIP and telecom markets quite handily with a headstart courtesy of MontaVista's tech and sales channels.

But one thing is for sure, analysts are not sure an embedded Linux player is what Sun needs to keep its momentum up on Wall Street.

"Didn't Sun already try this with the French company Chorus Systems SA, which it acquired in 1997 and discontinued in 2002?" John Abbott, chief analyst over at market research firm 451 Group, told internetnews.com. "The Chorus team left and formed Jaluna, now a MontaVista competitor. Sun made little impact into the telco equipment sector during that time, despite its already strong telco user base for servers. I'm not really sure how interested it is now in the embedded systems market. It would probably be better off looking for a mainstream Linux distributor rather than a specialist like MontaVista."

Stacey Quandt, a senior business analyst with the Robert Frances Group, agrees that a move by Sun into the embedded space does not make sense, unless it took into account the carrier-grade space.

"MontaVista is a key competitor of Sun's within the low-end network space," Quandt said. "If MontaVista is acquired by Sun, it would signal that Sun's management starting with Scott McNealy doesn't have confidence in the future of Solaris in telecommunications segment. The potential acquisition of MontaVista would also communicate a willingness on Sun's part to acquire a competitor in order to kill it."

Quandt also points out that Carrier Grade Linux is gaining traction in the telecommunications space and MontaVista is a recognized leader in that area.

"The threat to Sun is that carrier grade Linux solutions from MontaVista and others is eroding its market share," she said.