IBM is in advanced talks to acquire rival Sun Microsystems for roughly $6.5bn in cash, in a deal that could trigger wider consolidation across the technology industry as the recession shakes out weaker companies.
The acquisition would enable IBM, one of a handful of cash-rich companies to navigate the downturn so far largely unscathed, to cut costs sharply and bolster its computer hardware business in the slow-growing server market.
It would also loosen Microsoft's strong grip on parts of the server business and save Sun, a former Silicon Valley darling, from its struggle against shrunken demand and an over-reliance on hardware – the physical components of a computer system.