Will a rising tide of technology spending raise all boats? Sun Microsystems Inc.’s quarterly results underscored a growing consensus that a recovery in technology spending is underway. But analysts on Friday questioned whether the network computer maker will lag in the good times as it has in the bad.
Sun Problems Remain Despite Gains-Analyst
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Eugenia Loli
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That as a company, it’s slowly being squeezed out from the highly profitible enterprise hardware sector (because of low cost x86 hardware running NT and Linux) to the more non-profitible enterprise software sector (Java, JDS, StarOffice…), where Sun has lost most of their profit, but spent most of their R&D expenditure.
For years, analyists have told Sun that cutting out Sun’s software divisions into new companies would help Sun fiscally, much like Apple did with Claris. However, Sun’s executives have been rather stubborn about this, perhaps in delusions of grandeur in returning Sun back to the top of the IT world.
Maybe Sun has an image problem that it can’t seem to shake. I mean when you hear Wall Street talk about Sun you’d think the company was ready to file Chapter 11 or something. It seems the image is that Sun is old-hat… old technology… slow, expensive machines… “cheap Linux x86 boxes are the new alternative”. I don’t know if the “image” is accurate, but it seems to have become the prevailing attitude when anyone mentions Sun Micro. Not saying it’s right, just saying that’s what I’ve seen.
The fact is, the technology spending reversal is well underway and Sun still isn’t profitable, while IBM, et al. are doing very well.
Sun really needs to start selling some hardware, or it risks becoming completely irrelevant IMO.
John
From what I see of their respective market positions, Sun, Apple, and Red Hat look like candidates to merge with HP, Dell or Novell sometime in the next 24 months after the SCO/IBM gets over with and it becomes clear whats going to happen with linux and the GPL.
Forget about the corporate market for a second…. How many of you have a anything with a SUN logo on it in your home????
Sun failed to change their market strategy when their own market was drying up. Severe penalty for failure to react.
Going thru the world with the attitude “were SUN”, didn’t do them any good either…..
…but as I see it, Sun IS one of the top IT companies. They do not sell too much compared to its dimensions, that’s true, but they are top quality. They have the best OS out there. Linux probably will surpass Solaris one day, but today Solaris is the best OS out there, and Java is one of the best languajes/platforms to develop software for (if not sure, look at the products of IBM, Oracle, Sun, Borland, BEA, or maybe I should say almost every big/middle size company except Microsoft, of better, including Microsoft, ’cause C#/.NET is strongly based on Java).
If you look at server market, they have Solaris, if you look at desktop market, they have OpenOffice/StarOffice (initially not build by them, but a lot of improving is comming from them now), and recently Java Desktop (which is seen as one of the first real competition to Microsoft Windows, they have nothing really new in it, but they can push it more than any other in the field), and if you look at development world, they have Java languaje/platform.
For me they had a price problem, and it seems they are correcting this lately.
So I expect that they solve his problems and keep playing a leader role in the IT world.
That as a company, it’s slowly being squeezed out from the highly profitible enterprise hardware sector (because of low cost x86 hardware running NT and Linux) to the more non-profitible enterprise software sector (Java, JDS, StarOffice…), where Sun has lost most of their profit, but spent most of their R&D expenditure.
Their software is more profitable than their hardware division. Every manager from SUN has confirmed the existance of this little “profit centre” with in their company. Their x86 division is profitable as well, infact, their x86 side of the business grew at a modest rate. The only part of their company that is dying is their SPARC side, everything else is going quite nicely.
Maybe you should pay attention to their SEC filings. Software and services are the growth area with their x86 hardware slightly behind them.
The only thing that will drag them back into profitability is one of three things; a miracle occurs and they’re able to cut the cost of chip production by 3/4 and able to make up for the crappy server performance by cramming more into a server, the second is to disolve their SPARC R&D facility, and create a co-operative with Fujitsu where by both companies contribute to the development and enhancement of the SPARC line which will enable them to cut their R&D expenses considerably or the third senario is that that there is a suddenly miracle and an improved chip design falls out of the sky.
Either way, their SPARC business is pulling down the company. Oh, and for Pete sake, who ever is in charge of marketing should be sacked, sorry, given a public beating then sacked. I’ve never, sorry, Digital was worse, but still, I’ve never seen an organisation with such great products market so badly.
I was talking to a SUN sales person and he said, “I don’t understand, out SUN x86 servers are priced similar to Dell and yet, we still don’t get the volume”, the fact is, as I explained, you need to market. Marketing is about not only exposure but education. You potential market it sitting there, you need to tell that potential market that YOU’RE the organisation to trust when it comes to serious enterprise gear.
Btw, maybe its the Scottish/Protestant side of me coming out, but I could never get over the costs that SUN run up for their day to day operations. I’ll put money on it I could probably trim the work force back to 23,000 with no impact on service quality and pull the company kicking screaming back into profitability. Yes, it is perfectly do-able, and yes, without any “creative accounting” practices.
For years, analyists have told Sun that cutting out Sun’s software divisions into new companies would help Sun fiscally, much like Apple did with Claris. However, Sun’s executives have been rather stubborn about this, perhaps in delusions of grandeur in returning Sun back to the top of the IT world.
Apple never did it with Claris, infact, when they floated off Claris it was the biggest balls up EVER; with Filemaker, that was a good choice, it needed to be done. In the case of SUN, the biggest balls up was merging Cobalt into SUN. Cobalt should have been run as an off shoot of SUN, had they done that, today we would have a profitable SUN and profitable Linux appliance server business.
What the hell are you people babbling about with SPARC servers being slow? Obviously you’ve never seen any of the new Sun boxen before in action. The V440/480/880 server line (and up) beat the crap out of any POS intel-powered servers churned out by Dell and alike. Even buck per buck UltraSparc boxes are a better investment for database and ERP heavy lifting. SPARC is live and well and SPARC servers are here to stay for long time whether the clueless want it or not.
And for very few reasons it seems.
Sun is a long term player and will stay around for quite a while… It’s even more likely IBM will go out of business.
I think analysts are stuck in this “Linux hype” thing without really having a clue what good stuff on the market is all about.
I know one thing for certain, if the choice was to come, any category, between Sun and IBM, I’d choose Sun anyday over Big Blue.
Sun might not scream highest, but those who know, know that you shouldn’t care about who screams highest (Linux hype stuff) but rather who delivers most for least…
What the hell are you people babbling about with SPARC servers being slow? Obviously you’ve never seen any of the new Sun boxen before in action. The V440/480/880 server line (and up) beat the crap out of any POS intel-powered servers churned out by Dell and alike. Even buck per buck UltraSparc boxes are a better investment for database and ERP heavy lifting. SPARC is live and well and SPARC servers are here to stay for long time whether the clueless want it or not.
Assuming that this post was directed at me, maybe you should take the time to read what I wrote. I explicitly stated SUN’s SPARC design NOT Fujitsu’s. Fujitsu is actually moving up the “Top Ten Non-Clustered TPC-C” results table. The fact is, Fujitsu is actually doing something about the problem and making sure that there is a good price/performance ratio, SUN on the other hand simply as sitting back thinking that people are going to keep buying off SUN because they just so happen to be SUN.
I thought Sun’s V440/480/880 had Sun’s own UltraSPARC chips, not those made by Fujitsu?
J
Sun uses it’s own UltraSparc processor. Fujitsu builds its own called the SPARC64. Fujitsu’s chip is faster, it’s near Power4 performance. Recently, Sun and Fujitsu strengthened their alliance and will work together on mid-range and high-end servers. This could mean that Sun will adopt SPARC64 or that Fujitsu will help Sun’s UltraSparc plans. So we’ll see what happens.