Bangalore: If discussions between International Business Machines Corp. (IBM) and Sun Microsystems Inc. result in a merger, the gains the merged entity will enjoy in India will largely come from consolidation.
That’s because the two companies sell largely to the same set of customers here.
As does Hewlett-Packard Co. (HP), which could find itself at a disadvantage should the merger go through.
The local arms of Dell Inc. and Fujitsu Ltd are also peripheral players in this market for servers.
In 2008, technology research firm Gartner estimated that the Indian server market was worth $720 million (Rs3,700 crore today) in revenue, a growth of 5% over the previous year. The storage market was worth another $400 million.
An IBM and Sun combination would immediately become the market leader here in all categories of servers.
An analyst with a technology research firm, who declined to be identified, said that the most important fallout of such an acquisition for IBM would be the opportunity to sell services around the box. “IBM loves predictable services revenue stream, a thing which Sun has neglected to exploit to the full.” He added that the deal, if it happens, could damage Sun’s relations with its partners, who currently capture a portion of the value chain, and IBM’s desire to capture value of the entire chain.
In storage, neither IBM nor Sun is the market leader in India, but a combined entity will be able to take on competition from firms such as EMC, Hitachi Data Systems and HP more effectively.
The open source movement in India might actually get a boost as both Sun and IBM have been vocal open source proponents.
Spokespersons at the local arms of both IBM and Sun declined comment for this story.