Sun Microsystems is in talks to purchase a profitable Linux distributor, sources have told internetnews.com.
Sources close to the discussions said they expected that company to be embedded Linux player MontaVista, but cautioned that the deal wasn’t finalized and talks could still break down.
Representatives with Sun declined to comment. Kelly Herrell, MontaVista’s senior vice president of MontaVista’s strategic operations, told internetnews.com he was not
aware of a transaction with Sun and would not speculate on a potential deal.
Sun already has key Linux partnerships with Linux distributor Red Hat and Novell’s SUSE
Linux for desktop and enterprise software. But analysts said an embedded Linux distribution with MontaVista could be just what Sun needs as it looks for ways to re-build market share in the telecommunications sector.
“MontaVista and Sun seem to have complementary visions of the future of Linux,” said Michael Dortch, a senior analyst with the Robert Frances Group. “In addition, both companies are pitching their
software to numerous hardware partners, something MontaVista is more
experienced at doing than Sun. Also, MontaVista’s Linux for Communications Infrastructure offering could have interesting harmonies and synergies with
Sun’s ‘carrier-grade Unix’ initiatives.”
Illuminata Senior Analyst Gordon Haff said the “telecommunications industry is moving to Linux —
specifically carrier grade Linux — in a big way, and for reasons that go beyond the more cost-focused reasons that have caused Wall Street firms to dip a toe in the Linux waters to the detriment of Sun, such as ability to customize.”
Mark Stahlman, managing director of computer systems research at Caris & Company, said an embedded Linux play would take Sun into product sectors it can’t reach with its proprietary Solaris operating system. “It makes sense to me since Sun is clearly expanding their range of product interests,” he said.
Best known for its embedded Linux operating system, the Sunnyvale,
Calif.-based MontaVista recently released an early access version of its MontaVista Linux Professional Edition, based on the latest 2.6 Linux kernel.
The company has also been striking deals with database players MySQL and Sleepycat Software. MontaVista’s Professional Edition includes the capacity to handle
multi-process and multi-threaded architectures with a vast array of bundled
software components including rich networking. The source and binary
platform run across nine different processor architectures including IA-32,
x86, PowerPC, StrongARM/XScale, MIPS, ARM, Hitachi SH and Xtensa.
MontaVista also has a Communications Infrastructure platform that is an industry standard COTS (Commercial-Off-The-Shelf) Carrier Grade Linux
platform designed specifically for telecom and datacom — something Sun
might be tempted to use in its “ruggedized” Netra server lineup.
The latest addition to MontaVista Software’s product portfolio is an
embedded Linux product targeted at advanced consumer electronics devices
such as wireless devices and smartphones as well as environments like
automotive and home entertainment systems. Sun has a vested interest in the
mobile space and has seen very strong growth in the form of J2ME
and downloaded Java applets.
Linux, Telcos and Growth
The mixture of Linux and telecommunications is also proving to be a strong combination after a difficult few years in the telco sector.
Research and analyst firm IDC
forecasts that the telco services market should grow by 11 percent over the
prior year to US$137 billion, with services such as Voice over IP
shipments and spending will grow at compound annual growth rates of 40
percent and 31 percent, respectively, from 2002 to 2007.
Despite its history donating to open source projects, Sun has felt the sting of critics who accuse it of lukewarm support for Linux. At LinuxWorld three years ago, Sun went public with its first low-cost Linux server — the LX50 (now discontinued). After shunning Red Hat
back in the boom times, the company spent considerable time and effort trying to convince the open source community of its assurance of hardware
and software support for not only Red Hat products but for SUSE Linux, as
well. Recently, Sun added an early Linux version to its Solaris 10 operating system called Project Janus for a platform test run.
Rumors of the MontaVista acquisition stem back to just before LinuxWorld
San Francisco this summer when Sun’s Chief Operating Officer Jonathan Schwartz suggested that Sun could acquire the assets of Novell and put IBM in a
pickle. The buzz intensified when scheduled meetings between MontaVista and the press were abruptly called off two weeks ago.
The timing of the announcement plays right into the themes of location and surprise that Sun uses during its quarterly Network Computing
updates. The appearance of Sun’s Chief Operating Officer Jonathan Schwartz and
other company execs in New York this week is part of Sun’s so called “Take Back Wall Street” event, where executives are expected to highlight new programs and
promotional bundles of hardware and software designed specifically for a fixed price and telecommunications push.
Surprise announcements from Sun at these events are also becoming regular occurrences. Earlier this year, Sun coordinated the return of co-founder Andy Bechtolsheim with one of its events. The company followed it
up three months ago with the news that it has dropped its high-end SPARC architecture plans in favor of a joint
partnership with Fujitsu.
According to MontaVista’s Herrell, the distributor is the only profitable pure play Linux distribution that is still private. But Illuminata’s Haff noted that the value of MontaVista could be sticking point in any deal. “How much IP is there really in most of those companies except in the people themselves, which are always a very perishable resource in an acquisition?”
