A report in today's Wall Street Journal claims that Sun's execs have been shopping the company around recently and that IBM is an interested party. The report indicates that if the talks between the two companies go well, a deal could be announced fairly soon. The number allegedly being floated by IBM is $10 to $11 per share for Sun, which would put the total size of the deal at $8 billion.

Assuming that IBM is actually interested in buying Sun, the obvious question is "why?" There is a ton of overlap between the two companies' product lines, so it's hard to see a lot of complementarity there. In fact, such a deal would seem overwhelmingly to be about one thing for IBM: shrinking the competition. Suns execs would pocket fat bonuses, and the former Silicon Valley high-flyer would be chopped up and absorbed into the belly of the Big Blue beast. Parts of Sun's business with no volume and hence no real future in the present market (things like the SPARC processor family) would be end-of-lifed, while some software assets and other IP could be picked up and used by IBM.

Of course, the prospect of IBM gobbling up a weakened competitor on the cheap doesn't sit well with everyone. The Computer & Communications Industry Association sent out a statement this morning expressing deep skepticism about IBM's motives in this deal, and branding IBM with the "m"-word (monopoly).

"IBM's continued monopoly dominance of the high end computer market is a key factor and starting point in any analysis of this proposed deal," said CCIA's CEO Ed Black. "If this merger is announced, it will require careful, extensive review by antitrust authorities because of the wide range of tech products both companies now produce. IBM and Sun have been fierce competitors for years. A merger would eliminate a key competitor, which affects choice and prices down the line on numerous IT products."

So there you have it: if a deal is announced, expect some push-back from anyone with concerns about the antitrust implications, a group that could include HP and Cisco.

Keep the software, throw out the hardware?

There's some excitement among the commentariat about the hardware side of this deal—particularly around Sun's storage and server business—but I'm not feeling it. IBM is has been transitioning to a services model for some time, and this has been a good thing in two respects: 1) its services division has been profitable, and 2) hardware purchases have taken a much worse beating in the downturn than have services. Both of these factors added up to a relatively strong 2008 fourth quarter at IBM, when more hardware-centric rivals were hurting because their sales had suddenly fallen off a cliff with the rest of the economy.

When you add IBM's success with services to its proven prowess in building its own quite capable hardware, I have no idea why the company would want Sun's hardware business for any other reason than to kill it off and remove some competition. If IBM could sop up Sun's enterprise customers through a deal like this and ease them into the IBM ecosystem, that would put Big Blue in a better position against HP (and, with yesterday's big announcement, Cisco).

Sun's software portfolio could be another matter, though. There are some redundancies there (i.e., AIX vs. Solaris, or DB2 vs. MySQL), but Sun's lineup also contains some interesting open-source gems that IBM could put to good use, like Java and OpenOffice. Any IBM adaptation of Sun's open-source portfolio would probably entail some licensing changes, though.

IBM wasn't happy when Sun released Java under the GPL instead of a more permissive open source software license. It's possible that if IBM acquired Sun, Big Blue would move Java towards a multilicensed approach and potentially put it under the Apache Software License in addition to the GPL. This would make it easier for Sun's Java technology to be integrated into existing open source Java implementations, such as the Apache Harmony project, and it would also make it easier for Java to be repurposed by third parties for proprietary uses.

The CDDL, currently the license under which OpenSolaris is distributed, is incompatible with the GPL. This largely precludes the sharing of source code between Linux and OpenSolaris. It's very likely that IBM would adjust OpenSolaris licensing so that the useful parts of the Solaris stack—particularly ZFS and DTrace—can be integrated into the Linux kernel.

Ryan Paul contributed to this report