I.B.M. withdrew its $7 billion bid for Sun Microsystems on Sunday, one day after Sun’s board balked at a reduced offer, according to three people close to the talks.

The deal’s collapse after weeks of negotiations raises questions about Sun’s next step, since the I.B.M. offer was far above the value of the Silicon Valley company’s shares when news of the I.B.M. offer first surfaced last month. Sun, an innovative pioneer in computer workstations, servers and Internet-era software, has struggled in recent years and spent months trying to secure a suitor.

With I.B.M. and others shying away from a deal, a bruised Sun could be forced to continue pursuing a solo business model whose prospects have been questioned by many analysts.

Had it bought Sun, I.B.M. would have become the dominant supplier of high-priced Unix servers and gained the rights to a number of popular business software franchises, including the Java technology used on many Web sites. The deal would have also helped I.B.M. compete against the hardware breadth of rival Hewlett-Packard and given it some momentum to combat Oracle’s ever-expanding business software empire. However, I.B.M. also faced the likelihood of antitrust reviews tied to the stronger positions in Unix servers and mainframe storage that it would have gained under the deal.