IBM and SUN deal better for IBM's future

The possible merger of IBM (IBM) and Sun Microsystems (JAVA) comes at a critical time for the tech industry. A major shift in the way companies and consumers handle a vast array of computing tasks is at hand. With Sun's Internet technologies in its arsenal, IBM would be better poised to deal with the change.
Sun would give IBM a large portfolio of computer, chip, and software technologies and some of the most innovative scientists and engineers in the tech world. It would also strengthen IBM's hand in key markets, including government and telecommunications.
Perhaps the most important element of the deal lies in Sun's potential for cloud computing. This emerging technology lets people and businesses buy processing power as a service, over the Internet, rather than having to purchase, own, and manage their own expensive machines. Cloud computing consumers pay monthly fees for services provided by companies that specialize in operating computers super-efficiently in vast data centers. "Cloud computing is a different way of consuming and delivering computing," says Erich Clementi, general manager of enterprise initiatives at IBM, who spoke to BusinessWeek two weeks before news of the Sun negotiations was made public. "It has the potential to transform nearly everything we do."
Sun might help IBM better go after that market, analysts say. IBM has for decades been the leading provider of tech products and services for large corporate data centers. For corporate customers, IBM currently builds cloud-based data centers or provides computing services from its own data centers. A Sun acquisition would give IBM a better entry into another segment of the nascent market: providing technology to the companies that operate cloud data centers for large consumer-oriented Web services such as Facebook and Google's (GOOG) YouTube.

With its array of Internet technologies, including the Java software programming language, Sun has long been a favorite among Web startup companies. That affinity would clearly have some value for IBM.

In these days of trillions and billions in bail-outs and welfare, it looks like someone is willing to bail Sun out with $7 billion. I am just perplexed to see that entity is IBM, not Obama.
The only explanation seems to be that IBM wants to block Cisco and also HP.

If IBM can pull in Sun for 7B, it will be a great deal. 7 billion less the 3.1b in cash that Sun has on its books would mean a net of 3.9b for 12b in sales with an average margin of 47% = 5.64b of gross profit.Most of Sun expenses are R&D, 2.1B, and Opex 27%. Sun is already planning massive layoffs to get this more in line with industry average of 15-18%. I think IBM will be even more aggressive given that they already have sales, service, and marketing organization. There is nearly 100% duplicate organization structure bewteen IBM and Sun.
This rumored acquisition is a financial victory for IBM. They get strong product family with an enterprise operating system and solidify their position in many traditional markets (mainframes, Financial services accounts) while expanding their coverage in near ones (HPC, Education, etc).
IBM would be taking a risk by purchasing Sun…with no assurances that Sun's cloud offerings will take off. Still, its chances of being a major player in the era of cloud computing would be enhanced by the merger. And IBM, with a $13 billion cash hoard, can afford to pay the price.

All in all HP is lagging always in introducing new technologies, catching the trends (Cloud computing), not able to get rid off the legacy products, not able to identify and develop new business applications/solutions that will cater to WW Markets. Looks like only focused on acquiring companies and integrate the products. Many of them are overlapping thier existing products..!!Perhaps instead of Inventions they should say Technology Services as their caption or something better.