Sun-IBM talks 'to continue'

Talks over a possible merger between Sun Microsystems and IBM look set to continue‚ sources have claimed.

IBM is using ongoing talks to examine the different divisions of Sun Microsystems before committing to a takeover, it has been claimed.

According to Reuters, sources say talks will continue over the week ahead, with Sun's hardware and software businesses under particular scrutiny.

They insist a deal is unlikely to be reached before next week, pointing out that it is standard procedure for IBM to carry out a due diligence inspection of Sun's assets.

Rumours of a possible merger between the two IT giants have been circulating for some time and a deal could attract the attention of competition lawyers in the United States, analysts have warned.

Indeed, if the merger does go ahead, the newly created company would have a 65 per cent share of the market for Unix servers, Reuters reports.

The Computer and Communications Industry Association has said the deal will harm competition in the industry, potentially causing software and hardware prices to rise.

"If this merger is announced, it will require a careful, extensive review by antitrust authorities because of the wide range of products both companies now produce," said the organisation's chief executive Ed Black.

According to Dow Jones Newswires, analysts have predicted that there could be a wave of IT firms buying companies that make open source software if IBM purchases Sun.

They claim firms are increasingly turning to open source software to power cloud computing solutions.

"Larger vendors, such as Hewlett-Packard and Oracle, will be shopping around because the cloud and the technologies which support the cloud are what is going to enable them to plan for the future," said Theresa Lanowitz, founder of Voke Research.