Sun Snaps Up SevenSpace

Sun Microsystems Inc. (Nasdaq: SUNW) is looking to expand its managed services portfolio with the acquisition of remote management specialist SevenSpace Inc.

The Santa Clara, California-based firm announced the all-cash transaction earlier today, although the financial details are still being kept under wraps.

"Managed services" means outsourcing specific technology functions, and Sun is keen to beef up its core offering in this space as it attempts to catch up with arch-rival IBM Corp. (NYSE: IBM).

Ashburn, Virginia-based SevenSpace offers technologies to remotely manage and monitor customers' data center infrastructures. These encompass network devices, enterprise applications from SAP AG (NYSE/Frankfurt: SAP) and PeopleSoft Inc. (Nasdaq: PSFT), Oracle Corp. (Nasdaq: ORCL) databases, and the Windows, Linux, and Solaris operating systems.

This is something of a departure for Sun, according to Andrew Efstathiou, program manager at analyst firm Yankee Group. Before, Sun had some infrastructure management, but not on this scale,” he said.By acquiring SevenSpace, Sun has significantly extended its management services offering. In one fell swoop, it has added support for Hewlett-Packard Co. (NYSE: HPQ)’s legacy HP-UX and IBM’s AIX systems, along with Microsoft Corp. (Nasdaq: MSFT) Windows and Red Hat Inc. (Nasdaq: RHAT) Linux.

But Sun still has some way to go before it catches up with the IBM outsourcing behemoth, which already offers its extensive Tivoli suite of management products. IBM has even moved on to the next level, offering business process outsourcing in such areas as human resources, whereas Sun is still focused primarily on technology outsourcing. Last week, IBM even acquired Liberty Insurance Services as part of its ongoing push into business outsourcing (see IBM Acquires Liberty Insurance Services).

So, are we likely to see Sun follow suit? It’s unlikely, at least in the short term, according to Efstathiou. “It would require a huge investment, but other managed services offerings, such as managed application services, are possible,” he said.

However, today’s acquisition of SevenSpace does indicate a turnaround in Sun’s fortunes. The hardware giant has not exactly been busy in the M&A arena over recent months, although with this acquisition, Sun appears to be emerging from a difficult period in its history (see Sun Emerges From Cloudy 2004 and Is Sun Setting?).

The SevenSpace deal is expected to close in the third quarter of Sun’s 2005 fiscal year, ending March 27 next year. Upon completion of the acquisition, SevenSpace will become part of Sun’s Services organization, which is led by Marissa Peterson.— James Rogers, Site Editor, Next-gen Data Center Forum