Don Tennant

$4.1 billion on StorageTek? What a waste

By Don Tennant
June 02, 2005 12:51 PM EDT
If I were a Sun Microsystems shareholder, I'd be mad as hell. The board decided it would be a brilliant idea to spend over $4 billion on a vendor with which Sun already has an OEM arrangement to get the storage technology it doesn’t have the wherewithal to develop itself. Why wasn't being StorageTek's largest OEM partner on the planet good enough for Scott McNealy? Couldn't those billions of dollars have been spent a whole lot better? Of course they could. Hey, for $4.1 billion, Sun probably could have snagged Novell, whose market cap isn’t much more than half of that. Sun President Jonathan Schwartz has been practically licking his chops at the prospect of owning Novell because it would position Sun so well against IBM, a company that most Sun insiders hate even more than Microsoft. That famous August 1, 2004, entry in his blog said it all: "IBM is in a real pickle. Red Hat's dominance leaves IBM almost entirely dependent upon SuSe/Novell. Whoever owns Novell controls the OS on which IBM's future depends. Now that's an interesting thought, isn't it?" Yeah, it's a very interesting thought. And now that Sun has blown all that cash on StorageTek, it's probably out of the running for Novell. That leaves Hewlett-Packard in a much stronger bargaining position to snag it. Way to go, Scott.