Microsoft Would Be Nuts to Acquire Sun [Updated]

My colleague Michael Hickins has made the argument that Microsoft should acquire Sun Microsystems now that talks have apparently broken down between Sun and IBM. I’ve got to disagree. Even though Microsoft could clearly afford the price tag, it would be a foolish choice for almost more strategic reasons you could imagine, as well as some pragmatic observations of the company’s history and culture:

• First and foremost, Microsoft is not a computer hardware company. PC accessories such as mice and keyboards? Sure. Gaming consoles? Absolutely. But not computers themselves. The market ubiquity and power that Microsoft enjoys exists because the company is not tied to one hardware line or another. The two business models are like night and day, and creating a single strategy and operational approach for such mature organizations would be close to impossible.
• Putting the terms Microsoft and open source in the same sentence seems almost to violate a fundamental rule of grammar. It’s a strategic approach with which the company has always been uncomfortable, so buying a business so intertwined with the concept would be a clash, even though it might welcome the chance to kill off OpenOffice.org. To embrace OpenOffice as a free alternative to Microsoft Office would be unthinkable within management and of dubious value strategically. They’d be better off making a basic version of Office available for free on the web.
• Given Microsoft’s enmity toward other operating systems, can you imagine them bringing Solaris in-house and then having it coexist with Windows? It couldn’t happen, and their own product would win. That would effectively leave Solaris left to die off. But much of Sun’s position in the high-end server market, and the billions in potential server replacement sales it could bring, is tied to Solaris. Get rid of that, and you destroy the value of the acquisition.
• The conflict between operating systems would only be echoed by clashing programming environments, databases, and other products. In each case, for Microsoft to toss its own in favor of a new set would require an overhaul of its sales channel, support, and marketing strategies at the very least. Even if it were a good idea, the disruption would take years to work through, distracting management from the emerging cloud.
• As far as a cloud strategy goes, Microsoft thinks it already has one, and that will be based on having its software run on the machines of other companies. To take on a product line would send concern through its hardware partners and possibly even kick up demands for an antitrust action. That isn’t the sort of attention they want in Redmond these days.

I don’t even see the ego value to Microsoft of thumbing its corporate nose at IBM, being far more concerned with Google. This is a deal that makes no sense — but that’s fine, because the chance of it happening is probably near zero.

[Update: Michael Hickins further argues that the reason Microsoft should buy Sun is "just to bury IBM and, in the process, pick up a few important pieces that, with a little luck, could help a few of its critical businesses." But that is bad business. Even largely closing Sun down would be expensive and, as anyone who has been through an acquisition knows (I was on the due diligence and integration teams for at least one, and it was minor), it takes enormous resources to complete one. When you talk of billions of dollars, there is no simple writing of a check. Being two public companies, they also could not agree to a deal on a whim, but would have to justify something to their respective boards and shareholders.

Microsoft can't touch Sun hardware without completely recasting its strategy and angering virtually every business partner it has. Is it supposed to throw out the server versions of Windows? If Microsoft actually bought Sun, it would immediately find itself beset by lawsuits, running around trying to heal damaged relations, and completely distract upper management from every other strategic consideration. All of this would happen with much of Sun rebelling -- I agree with Wilcox on this. It would be an unmitigated disaster.

On the positive side, it would give some of us a target for at least a year or two of unmerciful mocking, after which it would become the poster child example of the foolish acquisition.]

Steve Ballmer image via Flickr user Nick, Programmerman, CC 2.0.