Sun CEO: Volume will drive value
Published: 30 Aug 2007 15:03 BST
more support for Solaris because another platform vendor has legitimised Sun's claim to provide an important OS that ISVs should support and take seriously.
But whether it will reap the same rewards from its new partnership with Google remains to be seen.
"It would be great for Sun to get StarOffice as the default office applications package on Google, but will they really be able to pull it off?" Brown questioned. "And how will they make money out of it?" And that, he said, is the perennial question about Sun's software.
"To date, StarOffice is one of those acquisitions that Sun has failed to do anything with maybe it should just sell the lot to Google for the company to develop? In the meantime, except for StarOffice aficionados, I would think the availability of StarOffice will just pass most Google users by."
Brown noted that Sun, in the past, has largely been unable though not for the lack of ideas and products to turn software into a big money spinner in a way that IBM, for example, has done.
"[Sun] can push software, and clearly there's already a huge awareness of Java in the region, and they can attempt to monetise this through support and educational services, but I don't think they have the scale in their services business to turn this into a huge volume business," he said.
Resurfacing from its past
Analysts believe, however, that Sun is "crawling back to health" after a tumultuous past five years.
In the space of a year, between 2001 and 2002, Sun went from an $18.25bn (£9bn) to a US$12.5bn company, Brown said. "But the speed with which it has been able to get back to health over the past five years has been dictated by decisions it took in the early 2000s," he added.
"Sun chose to ignore the market... It was late in adopting the x64 processor architecture, and it thought it could fight off the Linux assault on Solaris with its proprietary Sparc/Solaris platform," London-based Brown said in an email interview.
"When it finally came to its senses, it reinstated development of Solaris x86 in 2003 and introduced an x64 product range in 2005, after having to buy the company Kealia that designed it."
IDC's Arora noted that the key to Sun's success in the systems business is again about execution excellence. "For example, how is Sun aligning itself with key ISVs [independent software vendors] driving customer spending in key vertical markets such as banking, insurance, manufacturing and retail segments," he said.
Arora underscored the need for Sun to "do a lot more to gain mindshare and market share across public-sector customers", particularly in key emerging markets of India and China, to become the platform vendor of choice among this clientele.
"Sun's key challenge in the short- to mid-term will be time to market and speed of execution," Arora explained. "For instance, it only just released its first Intel-based servers earlier this year but a majority of Intel x86 processor-based products will not be available until the fourth quarter of 2007."
"The technology market is rapidly growing and evolving, and Sun will need to quickly adapt itself to stay ahead of the competition," Arora added. "To execute better, it needs to move things out quickly, and educate its salesforce team to position Sun as a systems vendor."
Arora noted that Sun is definitely in a much stronger position today than it was two years ago, due to a much more comprehensive suite of competitive offerings such as the APL (Advanced Product Line) and Niagara II processor-based systems.
Brown agreed. Three or four years back, Sun simply didn't have the products the market wanted, he added, noting that the vendor is now getting its product roadmap right.
"It has an x64 product line, though it doesn't sell anything like the numbers of x64 servers Hewlett-Packard, Dell Computer or IBM sell, and its Solaris operating system fully supports x64 systems so you can run it on HP, Dell, IBM or Sun servers," Brown said. He added that there is also growing ISV support for its Solaris x86, and Sun has a rejuvenated range of Sparc servers based on Niagara processors.
Arora said: "Sun is much clearer now in terms of its intention to drive a multi-vendor platform. It is important for Sun to have a Linux and Windows OS strategy for x86 servers because the two operating systems account for more than 85 percent of total shipments [in this market segment]."
"Sun will be significantly challenged in the short- to mid-term to quickly succeed in the x86 server space without having an Windows and Linux strategy," he said.
Brown added that a product roadmap alone is not enough to help Sun back to profitability, which was why the company needed to cut costs through layoffs, shake up the management and reappraise some of its pet ideas, such as utility computing.
"The change of chief executive from McNealy to Schwartz allowed some breathing space and the chance for the new man to introduce new strategies without accusations of U-turns [in strategy]," Brown explained. "It's not an easy climb back and Sun will stumble and fall it's only had three profitable quarters in its 2007 fiscal year, after five consecutive quarters of losses and its revenues were effectively flat for the year as its product mix changes from high-value to volume servers."
However, Brown added: "It is re-building the business, there's genuine enthusiasm in the company around its products, and there's a sense they've regained some of the old spark of inventiveness.
"They're not out of the water yet: three consecutive quarters of profits are not enough, especially when they're not accompanied by growth," Brown said, noting that he is not convinced yet that Sun's open-source strategy is anything more than a "me-too" strategy.
Brown added that the company is not winning new customers at the same rate that Linux distributor Red Hat is. And while Sun may see numerous downloads for its open-source products, he questioned whether many of these are large enterprises that would invest in a lucrative support contract to deploy an open-source environment.
He added that there is no doubt Sun is earning kudos for its initiatives in open source, but whether it has been able to develop these into money-making ventures has yet to be proven.
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