Sun CEO: Volume will drive value
Published: 30 Aug 2007 15:03 BST
First perpetuate the volume, then provide the value; that is the key equation in Sun's growth strategy moving forward, say top company executives.
Sun chief executive and president Jonathan Schwartz believes volume is being driven by the increasing number of people connecting to the internet from across the globe, and the resulting demand for new media content and services such as social-networking sites and mobile services.
Speaking at the company's inaugural Asia-Pacific Executive Summit, held this week at Sun's Menlo Park campus in California, Schwartz noted that a "massive buildout is underway", where the internet is increasingly populated with new users and new devices, in turn fuelling demand for Web 2.0, user-created content and services. The executive summit gathers journalists and analysts from the Asia-Pacific region with the aim to provide an update of Sun's performance, business strategy and product roadmap.
Sun's proposition is that "volume will drive value", and the IT vendor wants to sell the infrastructure and services needed to support the value portion of this equation. Describing Sun as "a systems company", Schwartz added that its collection of servers, storage, software and microelectronics products, as well as its services and data-centre businesses, have been well-positioned to meet this demand for value.
The company's fundamental thesis is to encourage a "non-economic set of activities" on the internet, he said.
Schwartz explained: "We want more businesses to connect online. And as more citizens, businesses and machines and devices come online, as that occurs, value will be created for someone. We believe the innovation that we create power a lot of these [non-economic] activities.
"The more we get people to connect online and the more we can bring individuals online, whether it is simply to communicate with one another or do business, the larger the infrastructure opportunity is generated," he said.
"If we can get millions of people to download Solaris, we will create a broader data-centre opportunity [for Sun]... If we can get billions of people to travel around with a mobile Java device, not only does that generate a small amount of revenue for Sun, it generates billions of dollars of infrastructure opportunity [for Sun] in the world of telecommunications carriers," he added.
To achieve this vision, Schwartz said that first Sun needs to help perpetuate volume and ensure it is visible as a viable brand in the era of new media one that is driven largely by consumer technology.
The more familiar people are with a brand, the more likely they are to adopt that company's technology, he said.
Sun's aggressive drive to make its products open source and freely available, including Java, Solaris and its Niagara chip architecture, is a huge part of Schwartz's bid to ensure the company's technology is as pervasive as possible.
Execution matters
Rajnish Arora, Asia-Pacific director of enterprise systems and workstations at IDC, said the challenge for Sun is in its ability to better execute in order to capture the value piece created through volume such that this part of the equation will not go to its competition.
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"Sun's premise is that the volume will be driven out of Java and OpenSolaris, but Windows, Linux and other operating platforms are not going to go away anytime in the foreseeable future," Arora explained, in an interview with ZDNet Asia. "So, Sun will need to address non-Java and non-Solaris customer initiatives as well to create a much broader addressable market."
One key market the company is looking to expand is Asia.
With 65 percent of the world's population currently living in Asia, this region will become an increasingly important segment of Sun's strategy, particularly in terms of growing volume, Schwartz said. The Asia-Pacific region, including Japan, Korea, Australia and New Zealand, currently accounts for 17 percent of Sun's overall revenue.
While he would give no concrete targets about how much this portion should increase, Schwartz threw up a figure of 40 percent by 2012 and suggested that this projection is not impossible to achieve.
Lionel Lim, president of Sun Asia South and Greater China, said Asia, by its sheer population size, represents an enormous growth opportunity and a base from which Sun can propagate volume in terms of technology adoption.
Lim added that there are more than 450 million internet users and more 950 million mobile users in the Asia-Pacific region by the end of this year, and this figure is projected to hit 1.5 billion by 2010.
Schwartz said Sun expects Asia to be its fastest-growing region simply because of the huge number of people who are getting online.
The company's revenue in the region grew by 11 percent, with the various markets achieving between "mid-single digit to 40 percent growth" in the company's last fiscal year ended 30 June, 2007. Sun's Asia-Pacific business covers Japan, Korea, Australia, New Zealand, Greater China, India and Asia South.
Lim added that the company intends to "get our rightful share [of the market]", and it is doing so by working with governments, pushing its open-source strategy and eco-technology and enlisting partners components that are in line with Sun's global strategy.
According to Ian Brown, senior analyst of IT services, Ovum, alliances similar to the recent agreement with IBM mean
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