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By:David K. Every
©Copyright 1999

Why should Sun and Apple merger?
By: David K. Every

There was a rumor a couple of years ago (1/96) that Sun was going to buy-out Apple. Considering at the time Apple was over twice the size of Sun, and it was not going to be done hostile (but with Apples help), and much of Apple was going to remain -- I think better terminology would have been that they were discussing a "merger" . But that doesn't sound as bad, and the press loves to make Apple look or sound bad.

Here we are again. There is a new rumor that Apple and Sun are talking merger (at least they got the wording right this time). I do not trust the source of the rumor, or the flimsy evidence it was based on (see Markoff on Merger). I do think it is a very good idea for both companies -- and much better now than a year ago. Lets think about what this merger would do -- and what a new company called "SnApple" would be all about.

A year ago Apple had not yet grown up enough. They had not made the tough choices and trimmed the fat (and unfortunately a little more than just fat in many cases). So Apple has grown up a lot in the last year. They are leaner, meaner and more focused. Those are all good things. Apple is also much more a bargain stock, so a merger makes sense there as well. Apple has acquired NeXT. A brilliant move, which sets them up with the most modern Object Oriented Operating System. Better than what Microsoft has been promising for Cairo for 5 years now... but says may happen around WinNT 6 -- expected after the turn of the century. This is a big leap ahead. Rhapsody is going to be built on Mach/Unix -- but have Apple superior user experience. Apple's new OS will have many personalities and be scalable way way up the food chain, higher than WinNT can go. But Apple has no real experience in the high end server market -- Sun does. Sun is also pro-NeXT/OpenStep/Rhapsody. Scott McNealy (Sun's founder) complimented Apple on their purchase of NeXT. (Sun was only a NeXT investor, they didn't buy the company). Sun also uses OpenStep and is very pro-OOD/OpenStep on Solaris. If Apple can entice developers to build Rhapsody/OpenStep Applications (and developers will come) then Sun is wins. The more Sun heads towards their OpenStep side, the bigger a winner they will be (in their server market). This is only better for both companies if Sun states their long-term direction will be OpenStep. But Sun can't commit to their long term direction being someone elses OS -- it has to be at least partly theirs.


So why does it make so much sense? Lets look at both their models.

Apple sells personal computers, in the true meaning of the word - low to mid range computers. Apple has machines from PDA's (Newtons, Set-Top-Boxes, Pippins' and eMates) up to mid-range servers. Apples servers are easy to use and administrate, but need a little more power and more solution options. Sun is trying to crack the low-end market with some Java Stations and possibly some PDA's, but doesn't have the manufacturing experience or capabilities in that area -- nor the name recognition (Apple would be a great compliment). Sun has powerful servers, and really excels with their solutions. Apple and Sun make a lot of sense there. Sun has nothing in the middle, and does not have much consumer/name recognition. Sun is also pretty vacant in mid-range computing -- there are no "personal" Sun boxes.

Apple sells big to homes, and publishing, lower-education (K-12). Apple does fair in business, higher-ed (Universities). Sun has no penetration or recognition in homes, little in lower-ed -- their focus is servers and solutions and are usually in Higher-Education, Corporations, and specialty market. Merging means opportunities for both that are very complimentary. They just flat out dominate some industries, and would complement in others. This is a big win.

Suns boxes are Unix based and powerful. But Solaris is a pain to use, and has a mediocre UI. It may be good for Unix, but it is no where near the same league (in ease of use) of even Windows -- let alone the Mac. Sun could have some BIG gains if they were able to use the Rhapsody UI. More than that, Solaris has a variety of high end Application -- but not many basic productivity application, games, or other tools that users in general need. Sun has to offer their own solutions, and those are expensive (and powerful), but not always the best choice for mid-range businesses. This is why Sun is doing so well in the high-end server, or vertical Application market -- because Sun is offering specialized solutions. But it is also why Sun is having problems cracking the middle computing market. Who wants to pay more for a Sun box to do work on when you can get a cheap Mac or PC that has many more apps?!?! But it still makes sense for companies and Universities to pay for a Sun for a dedicated server or specialty task. So Sun sells a relatively few servers -- but not much in the productivity arena. Imagine that Sun ran the same OS as a mainstream machine (like Rhapsody and MacOS 7/8). They would have many many more application, and would attract many more developers. This would allow Sun machines to start penetrating down further into the market, and allow the Mac to penetrate further up the market. Developers investments in solutions would be guaranteed much more revenue opportunities than they have today. Apple and Sun have both reached critical mass and are viable market-models on their own, but imagine them combined?!?! That would be a big win for developers.

Apple is building their new OS around Unix/Mach. Solaris is built around Unix. It would not be a difficult engineering effort to make Solaris apps run on Rhapsody. (Purple Box, after Sun's colors).

Sun has been using their own RISC processors - the Sparc chips. They are good chips, but that part of Sun's business is not getting a good return on investment -- yes they're fast, but they're not enough faster to justify the investment. Sun is kind of forced to stay there because they need to offer people special value for by Sun boxes -- but that market is drying up, and Sun needs somewhere to go. The PowerPC's are an awesome alternative. Sun could make some hybrid chips to ease the transition (for a few years), and slowly ease into an all PowerPC design. Then Sun could be the high end MP side of the Mac industry. Sun could add value to the processors and even create custom PowerPC's, or they could just license from the other manufacturers. This is a big win for Sun.

Apple has learned (finally) to be a more "Open" company, and license their OS and designs. Sun has seen the light of Open computing about 5-7 years ago. Solaris, OpenStep, Java, Sparc and all other Sun technologies are Open. With the Mac this could be a big win for Sun and Apple.

In this industry there is an attitude of "Up or out". (Kinda like the military). If you do not grow, then you may die. Sun is doing good in their niche's -- and Java is a pretty good way to grow into new markets, but they are now competing directly against Microsoft. To really compete well, they need more variety and to cover the spectrum. MS is trying to offer Windows everywhere -- not a good idea, but marketeers may like it. Solaris can not go anywhere, Java does an OK job, but can't go anywhere yet (but will soon). Apple is better positioned with MacOS 7/8, NewtonOS and Rhapsody.


A Sun-Apple merger would gain hype and allow for "SnApple" to have their OS's everywhere. It would generate hype, let both companies grow and improve both their product lines. It would prove that Apple is not going out of business (and destroying that myth will increase sales), enable new markets for the Macs and Sun's. It would increase competition in the industry, break some of the chains binding Sun, make both companies larger, and let them increase efficiency (by trimming redundancy). Increase both the companies base of high quality employees and products. Increase their name recognition, and let them both go places they haven't gone before.

This would really be a Win-Win situation. Even the companies corporate cultures are not so dissimilar as to be a problem. Sun is struggling more than some people know and Apple is succeeding more than many realize. This merger could not only shore up Apple but Sun as well -- and both companies could ride their success much better.


Created: 09/11/97
Updated: 11/09/02

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