IBM is bidding to buy Sun Microsystems for at least $US6.5 billion - a 100% premium on the market - according to a Wall Street Journal newsflash.

If it goes through, the acquisition would be the biggest in IBM’s history, beating its deal to buy business intelligence software maker Cognos for $US5 billion in November 2007 [UPDATE: Sun shares are up more than 80% today; read The Sun also rises].

Networking giant Cisco is preparing to enter the server market, putting it on a collision course with traditional partners like Dell, HP and IBM.

Cisco will release a server with bundled virtualisation software within months, The New York Times reports today. Currently, Cisco’s core business revolves around its domination of the $US40 billion market in routers and switches, which control network pipes and are complementary to servers.