Many software vendors are now embracing licencing metrics that incorporate the requirements of a virtual environment. Oracle, Microsoft and IBM are just three of the many vendors who have accepted that they have to move away from tying their software licences to physical devices or processors. Licencing software in a virtual environment based on processors can add up fast so it’s a good idea to look at negotiating software licences based on named users.  Data volume is going up fast for many organisations which in turn requires more processors, even though the number of actual users may stay the same or actually be decreasing. And one other point; Silver Bullet Associates is aware that some suppliers support contracts are not written to incorporate virtual licences and could cause a cost problem when the supplier insists the client revert the support contract from virtual to physical licenses before addressing the original issue.

According to Gartner, business spending on security software is increasing despite the economic downturn. Bucking the recession, growth of 18.6% for worldwide security software sales in 2008 to $13.5bn shows that security remains a priority for CIOs and IT security managers. Data security, compliance, privacy and increasingly sophisticated and targeted cyber attacks are fueling the growth of IT security software spending. Security firm Symantec continues to lead the market with a 22% share, followed by McAfee (10.9%), Trend Micro (7%), IBM (5.1%) and EMC (4%). Competition is fierce in this market and also having a whole raft of smaller vendors nipping at the heels of the largest vendors gives negotiators plenty of scope to play one vendor off against another. If security software is on your shopping list for 2009, then take the advice of Mark Bartrick, Managing Director of Silver Bullet Associates and make sure you use competition as leverage. 

Oracle Corporation is to buy Sun Microsystems in a deal worth $7.4 billion. The deal comes a fortnight after talks between IBM and Sun collapsed, following IBM’s decision to significantly lower its offer. It will give Oracle access to Sun’s strategically important Java and Solaris technologies, which underpin the Oracle database. Negotiation tip: Try to spread your spend across the new IT supplier landscape of the ‘big four’ of IBM, HP, Oracle and Microsoft to increase competition and to give your leverage at the negotiation table.

News and rumour from the USA sggests that IBM is ready to resume Sun takeover talks. Ten days ago negotiations broke after the two companies supposedly failed to agree on a price and other terms of a proposed acquisition. IBM apparently would go no higher than $7 billion, which Sun saw as under-valuing a business with $2.7 billion reserves in cash and short-term investments. In an indication of what the market is planning should Sun fail to find a buyer, Dell has launched a marketing offensive against the company with a campaign to offer Sun customers “an immediate path from legacy data centres to more open, flexible standards-based technology.” This may well throw up some interesting cost reduction opportunities for canny negotiators; either by swiching from Sun to a lower priced Dell alternative or by using Dell as a threat to encourage Sun to reduce their existing prices. What ever happens, it will be an interesting period ahead for Sun users.

According to US news agencies, takeover talks have broken down between Sun Microsystems and IBM,  with the two companies failing to agree on a price and other terms of an acquisition. Sun’s negotiators have apparently terminated IBM’s exclusivity agreement, opening the company up to merger talks with other parties. Analysts have suggested Japanese server maker Fujistu could make a move, being the largest OEM of Sun’s Solaris operating system. Other potential buyers could include Hewlett-Packard, Cisco or even Dell. Whatever the eventual outcome, Sun finds itself in desperate straits, having lost nearly $1.9 billion in its last two quarters and so far this year cutting headcount by 2,800 employees as it tries to pare down overheads to balance its declining sales revenue. With this developing situation, anyone looking to buy Sun in the next few weeks and months should be careful about what kind of deal they enter into. They should also be wary of any long term contractual commitments that may need to be honoured by any organisation that ends up buying Sun.