Sun moves into online auctions

Sun moves into online auctions

Sun Microsystems, with the help of its resellers, is developing a Web site where it will auction off used Sun equipment, say sources close to the project.

The company will select which resellers qualify to sell on the site, giving it control not only over sales of new equipment through its usual channels, but also of used equipment, currently the domain of Sun resellers. According to sources close to the plan, Scott McNealy, Sun's chief executive officer, has taken an active role in the development of the site, which will launch some time in the third quarter. Sun refused to comment for this story.

The company's auction plans -- and the resistance it's running into -- illustrate the opportunities and problems inherent in new business-to-business e-commerce systems. In part because of the success of eBay, manufacturers of everything from computers to clothes are taking a closer look at the auction model as a viable outlet for used and outdated products.

But for many manufacturers this stirs up a hornet's nest of conflicts. If they go direct, and particularly into auctions, they risk alienating part of their sales channel. And computer-equipment middlemen are not going to give up their franchises without a fight.

Sun's auction site wouldn't be its first move to online sales. In the last 18 months the company has morphed its Sun Express telephone direct-sales channel into an online affair called eSun. While it doesn't sell as much of its product online as Dell Computer or Gateway 2000, it's dealing with a very different market; instead of selling PCs to consumers, Sun sells mostly high-end workstations through an indirect channel of licensed value-added resellers, or VARs.

Sun's decision to edge into the secondary market may create problems for which the company is not prepared.

"If Sun sells used equipment direct, all of the support will fall on them," says Brian Sefton, CEO of Inmartech, which resells used Sun equipment in Sunnyvale, California, although it's not a licensed VAR. "To get any kind of support on small questions from Sun would take a week."

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