Wednesday, March 18, 2009


I remember about 9 years ago when IBM bought out Sequent Computer Systems []. My employer at the time was a Sequent customer and I knew people who worked at Sequent's corporate office. They were at first all gung ho about joining IBM, but the reality that set in wasn't pretty. As often happens in business, a big company buys a competitor simply to shut the competitor down. Click on the Wikipedia link provided to get some more info on the deal and alternative explanations for the decision to close down Sequent. If I worked for Sun, I wouldn't hold my breath that this would be a good deal for me, but the stock holders and upper management at Sun may come out well from this.

An alternative view of IBM's actions, born out of the belief that corporations maintain consistent strategies over the short and medium term despite executive changes, is that IBM acquired Sequent not to nurture it but simply to keep it out of Sun's clutches. Through its acquisition of what became the Enterprise 10000 server line from Cray, Sun had done so much financial damage to IBM's server market share, that IBM was very reluctant to see this disaster repeated. Even if it generated zero revenue for IBM, the net present value of Sequent from IBM's viewpoint was higher inside IBM than inside Sun.

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