Tech Spending Cuts
IBM was the top supplier of servers in the fourth quarter, with a market share of 36.3 percent, according to market researcher IDC. HP has 29.0 percent, followed by Dell with 10.6 percent, Sun with 9.3 percent, and Fujitsu with 4.2 percent.
These five server vendors all posted declines in their fourth-quarter server revenue, hurt by pullbacks in corporate spending on technology due to the weak global economy.
IBM's move, as well as Cisco's announcement on Monday, may signal a new wave of partnerships and acquisitions in the data center market as companies strive to provide more comprehensive products and services to their customers.
Cisco's move could put into play data equipment maker Brocade Communications Systems, infrastructure software maker Citrix Systems and niche network optimization companies, such as Blue Coat Systems and Riverbed Technology, analysts said.
"IBM wants to become a one-stop shop for all IT related offerings, whether it is hardware, software services or solutions," Avinash Vashistha, chief executive at IT consulting firm Tholons. "They have been executing this strategy for the last few years and with the Sun deal, they will only accelerate that move."
Sun, whose name stands for Stanford University Network, rose to prominence in the 1990s when start-ups flocked to its high-end computers, which run on its Solaris operating system and have been widely used in the financial services industry.
When the Internet bubble burst in 2000-01, funding for start-ups dried up along with much of the demand for Sun's computers.
Sun has tried to reinvent itself by offering more services and software, and expanding production of Linux-based computers, which tend to be cheaper. But that failed to revive its stock price. The company is shedding up to 6,000 jobs, or 18 percent of its workforce.
Sun shares are down 71 percent in the last year, a far cry from an all-time high of $258.75 during the dotcom boom.