Yahoo! needs a purpose/identity other than "a portal". Sun on the other hand needs to make some key acquisitions so it can complete its software stack. A merger of the two companies would create the ultimate open source company and the ultimate Microsoft competitor.
Both companies have already started restructuring exercises to trim the fat; together they would have quite a number of synergies:
Cloud ComputingBoth Yahoo! and Sun are behind the pack in terms of cloud computing. This is particularly ironic for Sun given that they were one of the early innovators in the field. Together they could quickly make up lost ground and address all three layers of the cloud.
Image courtesy of Expert TextureSaaS - This is primarily Yahoo!'s domain. Their acquisition of Zimbra has already started them down this path.
PaaS - This is where they meet in the middle. Yahoo! brings PHP and Hadoop, Sun brings Java/JRuby/Jython/Groovy and MySQL.
IaaS - This is Sun's domain. When network.com relaunches it will feature technology from Sun's Xen based products and their Q-layer acquisition.
The In-Cloud/On-Premises ContinumIncreasingly business want the flexibility to either deploy highly customized software on-premises, take advantage of a hosted solution, or deploy some hybrid combination of the two (company specific virtual appliance hosted in a 3rd party datacenter). The companies that can deliver these solutions to their users while providing seamless migration path between them will be the ones that dominate the future of IT.
Both Yahoo and Sun have already made individual strides in this direction. Together they would be even stronger. Yahoo!'s portal and brand recognition will allow it to deliver the SaaS solutions to the masses and the SMBs, while Sun's brand will capture the enterprise.
Open SourceYahoo!'s entire web infrastructure is built on the open source LAMP (Linux, Apache, MySQL, PHP) platform, Sun sees this as an important growth area and they are trying to get a foothold. Over the last few years Yahoo! has developed active communities around two key open source products that it uses internally:
- Hadoop an open source implementation of Google's MapReduce framework for distributed computing.. Yahoo! has the largest know Hadoop implementation.
- Sun's acquisition of MySQL last year for $1 billion was a bold statement about its commitment to open source (and the LAMP stack).
- Sun has developed thriving communities around its Glassfish and OpenESB projects and used them as the basis for several supported product offerings.
- Sun has abandoned its legacy portal product and released new product based an open partnership (no money exchanged) with Liferay
Datacenter Consolidation/OptimizationThe combined company could take advantage of each other's strenghts in the datacenter. Yahoo! would have access to high-quality hardware and software and the lowest possible prices. Sun would have direct access to the internal operations one of its largest "customers" (at least where MySQL is concerned). Together they would be able to "dog-food" new ideas on a massive scale before turning them into products.
Expertise ExchangeYahoo is known for their front-end engineering, Sun is known for their enterprise-level engineering. Together they fight
Competing with MicrosoftPeople having been doubting Microsoft long-term survival for along time, but the reality is that no one company can truly compete with them when it comes to software. We all know that the Windows/Office cash cow will gradually yield less and less, but their long term strategy is still a very compelling one: embrace SaaS, continue enterprise expansion, and build out the MS centric ecosystem. No one has the breadth and depth of interoperable software that can scale from individuals using ad-supported hosted solutions, to large organizations using highly customized on premises solutions. This combination will allow Microsoft to continue making ridiculous amounts of cash as computing paradigms continue to shift. Any company that figures out how to actually compete with them will carve out a big chunk of that cash for themselves.
But Yahoo!?Yahoo! wasn't the first company to spring to mind when I though about possible suitors for Sun, but now that I have thought about it, they really seems to fit. I suppose that by extension Google could fit the bill as well, but they are not as desperate as Yahoo!
There are plenty reasons why this merger will probably never happen, both companies are hurting pretty bad as far as their stocks are concerned and investors may not be crazy about such bold moves. But I can dream can't I?
What do you think can nothing plus nothing add up to something?