A takeover of Sun Microsystems Inc. (JAVA) by International Business Machines Inc. (IBM) would offer Big Blue some significant advantages in rounding out its product lineup as it faces down Hewlett-Packard Co. (HPQ) and others in the data center market.

Specifically, IBM could benefit from Sun's work as a leader in open-source software and could enlarge its opportunities in cloud computing with Sun's recent foray into the growing segment. And while IBM has moved away from selling hardware to focus on software and services, Sun's high-end servers could provide IBM the opportunity to quickly expand its market share in the area.

"The rumors that IBM is making a bid for Sun Microsystems might be causing waves, but after the storm the market will find that the two companies align well," said Jeff Goldman of Celent, an IT consulting firm.

In recent trading, shares of IBM fell 1.7% to $91.37, while Sun shares surged 79% to $8.93.

IBM's plans to acquire Sun Microsystems in a deal valued at roughly $8 billion, first reported by The Wall Street Journal early Wednesday, will primarily provide IBM the opportunity to turn a wealth of open source software into revenue, combining it with its own profitable software and services businesses.

Leveraging open-source software has remained a stumbling block for Sun and Chief Executive Jonathan Schwartz, but IBM has traditionally had more success in monetizing its own intellectual property, said Barclays analyst Ben Reitzes. Owning Java and Solaris, two of Sun's prized pieces of software, brings IBM an additional revenue stream for its software business, as well as added services work.

"From a systems perspective, this puts IBM in a very strong position for their software and the professional services that go along with it. It would give them a leading presence," Goldman said.

On the hardware side, Sun's high-end servers have lost market share as customers turned to machines from Dell Inc. (DELL) and H-P. But the company still garners roughly 10% of the server market share, with particular strength selling into the financial-services sector.

In 2008, IBM took home nearly 32% of server market revenue, and a Sun deal would give it access to an additional slice of the market.

Several analysts said it's likely that Sun's servers based on its proprietary Sparc chip will be phased out over time, and IBM will likely be able to transition Sun's customers to IBM machines, adding to cost savings and pushing back against server behemoth H-P.

"The eventual conversion of Sun customers to IBM Unix machines would not only help IBM's sales but potentially increase the utilization of IBM's own chip making operations," Reitzes said.

Additionally, Sun's recently announced foray into cloud computing with its Sun Cloud product, expected this summer, gives IBM an angle of attack on the growing cloud computing market.

Already other tech giants such as Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT) have begun to roll out products allowing customers to store and manage data at off-site data centers, lowering overhead costs. IBM plans to step into the market as well, though details are still sketchy on its platform.

However, a combined Sun and IBM may be able to benefit from the disparate markets each will likely target, adding to a fuller customer base as the cloud computing market grows.

Dave Douglas, head of Sun's recently established cloud computing business, wouldn't comment on the veracity of takeover reports, but said in an interview with Dow Jones Newswires that he expects IBM is focused on building from its relationships with large, established customers, whereas Sun will at its outset target smaller start-ups and finding customers in its Web development community.

-By Jerry A. DiColo, Dow Jones Newswires; 201-938-5670; jerry.dicolo@dowjones.com