Sun's (NASDAQ:SUNW) CEO, Scott McNealy, doesn't mince words. When he bought StorageTek (NYSE:STK) recently, he advised investors to expect other deals.
He certainly wasn't wasting any time. Yesterday, Sun announced the $387 million cash purchase of SeeBeyond (NASDAQ:SBYN). On the news, SeeBeyond shares surged 30% to $4.29.
Historically, Sun has been a hardware company, with a strong customer footprint within large corporations. In light of the deflation in hardware prices, Sun has recently begun shifting its business toward software. EMC (NYSE:EMC) took a similar approach, to considerable success. Both companies listened to their customers' requests for a top-to-bottom approach for managing data in every area of their businesses. But for EMC, it was much easier to buy best-of-breed companies.
Sun is hardly bereft of software, but its track record in that area has been spotty -- not unusual for a company with its roots in hardware. Sun's Solaris operating system has lost users to Linux, to the point where Sun recently transitioned Solaris to open source. Even Sun's in-house application server software has become a victim of open source thanks to its free rival, JBoss.
Open source software's code is freely downloadable; programmers around the world can add to, modify or fix it. Though open source software can be less polished than commercial offerings, it often costs less as well. Sun may be trying a halfway approach with its new open source offerings, in which the code for its open source programs works better with its own products.
Sun's SeeBeyond acquisition will bolster the company's embrace of Web services, standards-based technologies that allow an organization to better link and access its servers, applications and databases. It's hardly a novel move. Companies like IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT), and Tibco (NASDAQ:TIBX) have been developing Web services over the past few years. Now, Sun realizes it's time to get into the game.
Unfortunately, as usual, Sun is playing catch-up. In the tech world, that's usually a loser's strategy.
Shine on with further Sun Foolishness:
Fool contributor Tom Taulli held no financial positions in any company mentioned in this article at the time of publication.
