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Microsoft server boss on Sun-IBM, economy, more

In an interview, Bill Laing says the sluggish economy probably accelerated merger discussions. As for Microsoft, a deal would mean both one fewer partner and one fewer rival.

SAN FRANCISCO--The server market is rough these days and the tough times are having a variety of repercussions.

One of those impacts, says Windows Server Vice President Bill Laing, is the reported deal in the works between IBM and Sun Microsystems.

Laing Microsoft

"It's not surprising," Laing said, as part of a wide-ranging interview on Friday. "I think the economy has accelerated this," he said, pointing to other deals, such as this week's acquisition of SGI's assets by Rackable Systems.

"The server business has certainly been struggling really the last six months," Laing said. "I've seen decline across the board."

For the Windows Server business, Laing noted the acquisition of Sun would mean the loss of a partner, as both have Windows Server options in their lineup. (It would also mean the loss of a standalone rival, as both IBM and Sun focus a whole lot more on their respective non-Windows servers.)

Laing said that there could be an opportunity for Microsoft as the two companies work to integrate their products. "It looks like a complicated set of overlapping products."

As for Sun, Laing noted it is a company that plays in many parts of the tech industry, from storage to servers to chips to Java.

"Their presence in the industry was bigger than their revenue," Laing said.

As for Microsoft, Laing said it, too, is taking a hit in the server business, particularly when it comes to sales of new hardware.

"We're certainly seeing new server units decline," Laing said.

The ultra-high-end and ultra-low-end of the markets are growth areas for Microsoft, however. He noted that Microsoft just this week added a new version of Windows Server for low-cost servers, boxes costing as little as several hundred dollars.

Windows Server 2008 Foundation has all of the features of the standard server product, but is limited to single processor machines with 15 or fewer users.

"We actually did that pretty fast for a Microsoft product," Laing said, noting that the product had its genesis in an e-mail he sent in September asking if Microsoft needed a product specifically aimed at emerging markets.

"People came back with clippings from Japanese newspapers with servers that were $299," Laing said. "I started realizing it was more than just emerging markets."

By talking to Microsoft's many subsidiaries, Laing said the company realized the need for a lower-cost product was a global one. "The economic environment made it even more important."

Overall, Laing said the company is faring well competitively against Linux despite the obvious appeal the operating system has with its free up-front cost.

"Relative to Linux we are holding our own," he said. "It will be interesting to see through these economic times."

For more from Laing, here's a quick video I shot at the end of our chat on Friday as well as the story I posted earlier Friday with Laing noting that Microsoft plans to ship the server version of Windows 7--Windows Server 2008 R2--this calendar year.