Sun to buy Novell?

Sun Microsystems is toying with the idea of buying Linux company Novell, claiming that springing for the $2.64bn company would hurt rival IBM.

Sun COO Jonathan Schwartz, said: "With our balance sheet, we're considering all our options. What would owning the operating system on which IBM is dependent be worth? History would suggest we look to Microsoft for comparisons."

IBM famously relied on Microsoft for an operating system for its personal computers. Schwartz said in a Sunday blog posting that IBM relies on Novell's SuSE Linux as a competition to keep number one Linux seller Red Hat from growing too strong.

But several factors could reduce the likelihood of such an acquisition. First, though Sun has cash and marketable securities of $7.61bn, Novell isn't cheap, with a market capitalisation of $2.64bn as of 30 July.

And Sun had an opportunity to buy SuSE Linux for much less in 2003 - indeed, it made an offer that Schwartz said forced Novell to increase its $130m bid. Novell ultimately paid $210m, receiving a $50m investment from IBM as part of the deal.

In addition, Sun's Java Enterprise System server software heavily overlaps Novell's software line. Schwartz said Novell's non-SuSE products are "far less interesting".

Novell and IBM couldn't immediately be reached for comment.

The possible acquisition was first reported by the Wall Street Journal.

Since taking over as Sun's number two executive, Schwartz has worked on several radical changes at Sun, for example, bringing its server software to rival operating systems and bringing its Solaris version of Unix to Intel's Itanium and IBM's Power processors.

Acquiring SuSE Linux, which runs on IBM's Power servers and mainframes, could speed Sun's effort to spread Solaris to other servers, Schwartz said.

Eventually, Sun plans to make Solaris open-source software.

Stephen Shankland writes for CNET News.com