For a while now we have heard analysts speculating that Sun Microsystems, one of the early innovators in the Internet economy, had a limited amount of wind left in its sails (or should we say, sales).
Sun’s detractors are plentiful, but locally none are more vocal than META analyst, Kevin McIsaac. For several years he has predicted the imminent setting of Sun, and last week even went as far to say that the vendor would end up becoming another Digital Equipment Corp. The server hardware market has commoditised, he speculates, RISC-Unix systems are on the way out, and Intel will own the data centre space by 2007.
There is no shortage of evidence in the market that would back up McIsaac’s argument. One reader recently alerted ARN to a striking example — being a service provider in the market for some hardware upgrades. He cited two quotes — one for a Wintel solution and one for an equivalent Sun solution. The former was around half the price. Sadly for Sun, even those techies with a ‘soft spot’ for the vendor claim they have no choice but to choose cheaper alternatives.
During his most recent visit to these shores in March, Sun CEO, Scott McNealy, scolded press and analysts for basing their evaluation of Sun’s prospects on price lists. He insisted that Sun was a “systems” company, not a marketer of commodity products.
Such statements ring alarm bells in the analyst community. You might recall a recent opinion piece by one of our US writers, Tom Yager, who described Sun’s current situation as “desperate”.
“Sun Microsystems is lobbying to sell you something. Anything,” he said. “Was there ever a better time for a technology company to pull out all the stops?”
In this issue of ARN, you will read about how Sun will pull out the stops. Each initiative has been clearly targeted as a low-cost attack on the vendor’s Wintel competitors.
Project Orion, which sees all of Sun’s enterprise software pre-tuned and updated quarterly under a subscription licensing service, has been well received by Sun’s Australian channel partners who are quietly confident that customers will flock to it.
Sun’s appropriately named desktop play, “Mad Hatter”, is also an aggressive piece of marketing. Its success, I can only imagine, will not be measured on how much income it generates from Sun but more importantly how much revenue it sucks out of Sun’s competitors. In the next few weeks the reviewers, and in coming months the end-users, will determine whether this truly is a realistic alternative to Microsoft’s desktop domination.
If there is one thing going in Sun’s favour when it comes to trying its hand at low-cost computing, it is Sun’s decision a couple of years ago to clear up the muddy waters of its Australian channel. Managing Director, Laurie Sellers, and director of partner sales, Paul O’Connor, have both stipulated that they want at least 70 per cent of sales to include the involvement of channel partners.
In the US, Sun has even gone as far as to say that it will not approach any customer with less than 1000 employees in a direct capacity. Sun realises that it does not have the reach (especially if rumours of mass lay-offs at Sun prove accurate) to deal direct with anyone but the largest of organisations. The vendor’s new product strategy, while it does involve subscription licensing, might well prove to be a boon for its channel partners.
It will make for an interesting 12 months for Sun Microsystems and its partners. It’s desperation stuff, but its so crazy it might just work. How do you rate Sun’s prospects?