View from the Hill

Time for changes at the top in Sun?

I communicate with more Sun users and VARS than probably anyone else on this planet, but you don't need my privileged view of this market to know that all is not well in the Sun market. Here are some of the apparent symptoms:

• Sun is shipping SPARC processors with a top speed of 750MHz, whereas Inteal architecture servers clock at twice the speed. OK - that's happened many times in the past, and you could argue that running a 64 bit OS at 750MHz is every bit as fast in a multi processor environment as running a 32 bit OS on 1.5GHz Pentiums. But the biggest Wintel servers aren't just snapping at Sun's heels any more. They're already in the datacenter.

• All the easy customers have gone. The get-rich-quick dot-coms which were Sun's fastest growing customer segment are dust. The slowdown in the US is hurting everyone, but Sun is going to have to kick its dot-boomer habit.

• Enterprise storage represents a huge growth opportunity for some computer companies. Unfortunately, Sun started behind the leaders, and is growing its storage business at a laggardly rate compared to the fastest storage companies. Sun says their storage business is growing, but it can still grow while losing market share. OK, during the last year, Sun has acquired a clutch of storage companies and changed the top management in this division, but the metrics on our sister publication STORAGEsearch.com suggest that most storage buyers are underwhelmed by Sun's changes. This is a market where you have to delight your customers, and just doing the same old stuff as everyone else is not good enough. Actually maybe all markets like that now...

• Sun is still in denial about the desktop. You can't help getting the impression that if they could try out that DeLorean in the movie "Back to the Future" - Sun's senior management would like to go back to the early 1980's and have another go at taking on Microsoft and the PC market. Sun invests and wastes a lot of economic energy wishing it was Microsoft. This creates amusing opportunities for journalists, but doesn't achieve anything constructive. IMHO Sun should spin off Java, Jiro etc maybe as open source projects. Those individuals who wanted to join the anti-Microsoft playpen could be given inducements to join the new start up. Then Sun should recruit a bunch of top managers from Dell or Intel who really know the PC business, and re-engineer better solutions for users who want to use SPARC servers in the real heterogenous world.

• As has been widely reported - Sun is closing down operations for a week in the Summer. Maybe not so well known, is that Sun seems to be planning major surgery on its reseller channel. That, could be a very big mistake in the long term. Currently less than 2% of the computer VARS in the US sell Sun Microsystems or compatibles. VARS have to invest a lot to understand the SPARC and Solaris environments. If Compaq cans a VAR, they can always go and find another Wintel solution to sell from somewhere else. If Sun cans a VAR, that company may decide that the game isn't worth the candle, and be lost as a Sun technology compatible channel forever. At a time when Sun should be working hard to make more friends in the computer business, alienating friendly VARS is a dumb idea. The channel strategy which works for Dell Computer, won't work for Sun.

The time comes in all organizations when they lose direction, and maybe could be better managed by people who are not necessarily their founders. The top management gets older, and starts becoming resistant to change. Or in the case of Sun, maybe boredom is creating an urge to make too many of the wrong kind of changes. There's also a problem caused by believing your own hype. During the dot-com boom, Sun was a real beneficiary of that hype. Today, it doesn't help. The hubris factor resulted in Apple giving away the dekstop PC business in the early 19080's. Before Gerstner, IBM was a lumbering elephant, with everyone taking pot shots at its business. It took a long time to re-energize IBM, because the decline had been going on so long.

Sun's market started to change dramatically about 9 months ago. For a while it seemed like it would be business as usual, and Sun's revenue growth continued on momentum. But today Sun seems to be shooting in too many different directions. They should concentrate on making the world's best servers and multiprocessing operating system. When they re-establish their lead in that area, there may be more time for the play pen.

SPARC(R) is a registered trademark of SPARC International, Inc. SPARC PRODUCT DIRECTORY(SM) is a service mark of SPARC International, Inc used under license by ACSL. Products using the SPARC trademarks are based on an architecture developed by Sun Microsystems, Inc.