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In the past, IBM has mostly focused its acquisition efforts on companies that will bolster its software and services businesses, rather than its hardware, but that may change. IBM is currently in talks to acquire Sun Microsystems offering to pay Sun at least $6.5 billion, or double Sun’s Tuesday closing price of $4.97, according to a report on Reuters.

If the two companies can reach a deal, it will be IBM’s largest-ever acquisition, pushing the company to the forefront of the high-end computer server market. Many analysts see the potential deal as a recent trend in consolidating major brands, where server equipment providers such as Hewlett-Packard, IBM and Cisco Systems compete for the lucrative corporate data center market to supply network equipment to high-end computers.

It has long been speculated that Sun would be bought out by a major IT company, and the company has been seeking a buyer in recent months, according to bankers. So far, IBM is leading the data center market as top supplier of servers in the fourth quarter of 2008, with a market share of 36.3 percent, says market researcher IDC.

Trailing behind in second place is HP with 29.0 percent, followed by Dell with 10.6 percent, Sun with 9.3 percent, and Fujitsu with 4.2 percent.
With Sun’s shares falling 71% in the past year, it says it would soon be cutting around 6,000 jobs, or 18 percent of its workforce.

Tags: Cisco Systems, Data Center, IBM, Sun Microsystems

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