Collapse of IBM deal could weaken Sun even more

By Jim Finkle - Analysis

BOSTON (Reuters) - Sales at Sun Microsystems Corp (JAVA.O), already under pressure, could take a further hit from the collapse of IBM's (IBM.N) multibillion dollar bid.

The failure of the high-end computer and software company to sell itself might drive customers to its rivals -- International Business Machines Corp, Hewlett-Packard Co (HPQ.N) and Dell Inc (DELL.O) -- say consultants.

"I would hate to be in the Sun sales organization at the moment," said Eric Johnson, director of the Center for Digital Strategies at Dartmouth's Tuck School of Business. "Pretty much every corporate client is going to ask them: 'Are you going to be here next year when I need help from you?'"

And that is raising the stakes for Sun's board and Chief Executive Jonathan Schwartz to show there is another plan for turning around the struggling computer maker.

A company's attempt to sell itself often alarms customers by raising a host of tricky questions, such as whether the new owner will continue to add new features to the products they've already bought or to keep providing strong support.

He said those exact questions came up on Wednesday morning during a breakfast meeting with technology executives.

In response to an inquiry from Reuters, Sun said such concerns are unfounded.

"Sun is committed to our customers and channel partners, and will continue to do what has always defined the company: innovate for customers," a company spokesman said in a statement.