Sun needs the help, IBM's got the cash, and the IT industry need this to happen Java, Solaris, Sparc, ZFS, and so much more — for decades, Sun Microsystems has been an engine of innovation. Its powerful, RISC-based servers were the foundation for much of the Internet, and the company in its heyday was a significant counterweight to Microsoft.But without a white knight or a miraculous economic recovery, Sun — which has traveled with the walking fiscal dead for the better part of the last decade — will shrivel to an insignificant niche player. Now it appears that IBM wants to buy the faltering company — and that would be a very good thing for Sun’s culture of innovation and the IT community.[ For more news and analysis of a possible IBM acquisition of Sun, see InfoWorld’s special report. ] R&D: Sun’s catch-22 Normally I’m not a big fan of large-scale mergers between IT vendors. The serial acquisitions of DEC by Compaq and Compaq by HP — among others — show that while M&A is great for the bankers, it all too often results in massive job losses, reduced competition, and decreased innovation. But this one is different.Unlike Compaq, which probably could have thrived on its own, Sun can’t. One of the reasons (far from the only one) Sun is in trouble — and a good reason to hope for its survival — is its big R&D budget. While other companies have cut back on research, Sun hasn’t; it still spends about $3 billion a year on research and development. That’s more than seven times the company’s operating profit of $403 million last year and about 22 percent of Sun’s total revenue. IBM, of course, spends very heavily on R&D as well — about $6 billion a year. No doubt there would be some consolidation on the research front, but the combined budgets would still be huge and a font of significant technological innovation.Of course, the main reason for Sun’s decline is the same as it has been since the bust: the commoditization of the server market. Cheap but powerful x86 servers rule. Sun has a piece of that market, but it’s not a big enough piece and the margins are too thin.It’s probably no coincidence that the proposed $7 billion acquisition, which has been cooking for some time, comes as Cisco is entering the server market. While I’m not convinced Cisco’s Unified Computing System will be a game changer, it can’t help Sun, which can’t afford to lose any more server market share. Combined, the two companies would have about 65 percent of the Unix system market and 42 percent of the total server market, a factor that could create an anti-trust problem. Opportunity in the cloud Earlier this week, Sun made its entrance into cloud computing with plans to offer compute and storage services built on Sun technologies, including OpenSolaris and MySQL. IBM has been pursuing a different strategy, building the infrastructure for cloud computing, but not yet offering to host a cloud. Sun’s play is interesting, but it lacks the financial strength to beat down Amazon’s EC2. With IBM involved, that issue goes away, and we can expect to see more vibrant competition in the cloud — another big plus for IT.[ Find out what’s different about developing cloud apps | See what cloud computing really means ]MySQL, incidentally, was an expensive buy that hasn’t made much, if any, money for Sun. Added to DB2, Big Blue would have a more compelling offering in its database battle with Oracle, and more importantly from the perspective of innovation, it would keep that excellent technology alive and growing. If there’s a downside here, it’s for Sun employees. The two cultures are famously different; can you imagine an IBM CEO with a ponytail? And IBM has been playing very rough, cutting jobs and even suggesting that some laid-off workers move to India.Yet even fewer Sun employees may have jobs if the company stays independent and continues to shrink. Sun’s shareholders are obvious winners. IBM’s $10-a-share bid is more than double Sun’s value before word of the offer leaked out. And from the perspective of IT in general, the industry has much more to gain if Sun is acquired than if it fades away. I hope IBM closes the deal.I welcome your comments, tips and suggestions. Reach me at bill.snyder@sbcglobal.net. Related articles:IBM is in talks to buy Sun Microsystems If IBM and Sun merge, watch out Oracle and SAP Sun challenges Amazon for cloud dominance Sun Cloud — aka not a story about Sun and IBM Sun shines dimly in Big Blue’s shadow Will cloud computing do away with IT pros? Analysis: Sun’s billion-dollar baby Technology Industry