The news broke this morning, March 18th, that IBM is talking to Sun about buying the company. Sources from both companies tell me that such a deal is in the works and it may be completed as early as this week.

Sun’s pricetag may be as high as $6.5-billion with a large part of the deal being made with IBM stock. Sources indicated that what IBM wants is Sun’s software businesses, not its x86 and SPARC server lines.

There are three possible hardware plays here. One is that part of Sun will remain as a hardware server firm. Another is that IBM will go ahead and buy the hardware line and merge Sun’s x86s into its System x line and place SPARC within its System p division. Finally, some or all of Sun’s hardware may go to a third company, such as Fujitsu, which is already in the SPARC business

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