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4/6/2009
03:56 PM
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Feds Tap Sun For Healthcare IT Despite Uncertain Future

Health and Human Services will use Sun software to help fulfill Obama's e-health promise.

The murk surrounding Sun Microsystems and its stalled acquisition talks with IBM isn't stopping the federal government from awarding key contracts to the troubled tech vendor.

The U.S. Department of Health and Human Services is relying on Sun for a number of critical open source technologies as it builds out a so-called "network of networks" designed to electronically connect key players in the nation's health care system and help fulfill a major campaign promise.

President Barack Obama has said he wants all Americans' health records digitized by 2014 as part of his effort to reform the health system.

On Monday, Sun disclosed that HHS is using a range of Sun open source technologies to build out the Nationwide Health Information Network (NHIN). Among them: Sun's GlassFish application platform, its Java Composite Application Suite SOA platform, and the Sun Java Identity Management Suite.

"NHIN is a poster child for all of the benefits that open source software and open standards provide," said Bill Vass, president and chief operating officer of Sun's federal government unit.

The government's decision to rely on Sun isn't without risk. Questions abound over what might become of the company's various product lines if it's acquired by IBM. And there's even more questions about Sun's future if it isn't bought out.

As of Monday afternoon, a deal appeared unlikely.

The company's stock price fell sharply on reports that merger talks with IBM had reached an impasse. Sun shares were down 25%, to about $6.37, in late-day trading as investors laid odds that the company was unlikely to be acquired by its larger rival after all.

Negotiations collapsed Sunday following IBM's tabling of a price that was lower than its original offer and Sun's insistence that it consider other proposals, according to several published reports, all of which cited unnamed sources. Officials for Sun and IBM haven't commented on the issue since the discussions reportedly began.

Complicating the process is a reported split in Sun's board that has put CEO Jonathan Schwartz and chairman Scott McNealy on opposite sides of the table. McNealy is said to be against a deal, while Schwartz reportedly favors an acquisition by IBM.

Some analysts believe an IBM acquisition of Sun still makes sense. Sun's proprietary hardware business has all but dried up in the face of competition from commodity players such as Intel and Dell, and it's struggling to keep pace with larger players in the software business, such as Oracle, Microsoft, and IBM itself.

Yet the company retains key widely used assets, including the Solaris operating system, the open source MySQL database -- which boasts more than 11 million installations -- and the Java programming language.


InformationWeek Analytics has published an independent analysis of IT governance models and metrics. Download the report here (registration required).

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