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NewsForge: Sunset for Cobalt?

Sep 27, 2000, 19:26 (1 Talkback[s])
(Other stories by Jack Bryar)

"A number of analysts claimed that the high price brought by Sun's purchase of Cobalt Networks was proof of the value of Open Source. But if so, why was Cobalt's Michael DeWitt trying so hard to avoid even uttering the word Linux? And Sun's Scott MacNealy doesn't do high-priced deals. Why did he pay so much for such a tiny company?...."

"Among the most amazing aspects of the deal was that Scott MacNealy paid top dollar for a very small (300 person) money-losing company. Sun has bought relatively few firms and usually acquired them at bargain basement prices. A couple of the analysts I spoke to suggested that Cobalt had been shopping itself to several would-be buyers, and that Sun was simply the high bidder. As evidence they pointed to the flurry of recent announcements involving Cobalt, and firms like Yahoo and IBM, and the fact that Sun COO Zander was in Boston rather than home at the time the announcement was made. They suggested that Sun simply needed the company more than IBM or any of the other IT and communications hardware vendors. Rumors had been flying about a deal for some time. Zander admitted, 'This announcement shouldn't come as any surprise.'"

"But why the high price? Zander said that Cobalt had effectively discovered a fast growing new market which they dominated, they had developed a direct sales channel, and they had developed an 'appliance' model that could be extended more deeply into telecommunications and network area storage markets and to smaller companies."

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