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View from the Hill - #3
It could become a successful PC supplier a lot more easily than you might think... But does this make sense from a strategic business point of view?
|Thousands of companies manufacture computers. Hundreds of millions of users have Intel architecture PC's. Of all the leading computer manufacturers in the world, only Apple Computer and Sun Microsystems do NOT have Intel based PC's in their product line.||More views from the hill...|
Apple has been fighting the desktop war in its own way, and it looks like it will retain its distinctive alternative niche. Sun has never been successful in the desktop market but has many attributes which could enable it to successfully step into the Intel Inside® desktop arena. This article analyzes why Sun could be a powerful PC player, and why they will probably decide not to go down this road for another couple of years.
Some people at this stage, especially if they work for Sun, might say "what about the NC?". To which I would reply, take one home, give it to the kids for Christmas and see what they say. My guess is that they will find it only marginally more useful for their computing needs than your microwave oven, and a lot less attractive than a PC, a MAC or a Playstation. Warning! Don't try this experiment in real life, because the outcome could be dangerous.
I knew that Sun had lost their sense of perspective on the desktop when they introduced the JavaStation in 1996. Sun is good at hype, but this was the most hype I'd seen about a dumb terminal. OK, it was important, if you were a user of dumb terminals because VT100 emulation (an old DEC standard) made it difficult to implement the kind of windowing that people saw on their PC's at home. Hell, even a mainframe environment doesn't have to be boring.
There is a market for terminals, just as there is a market for railway rolling stock. But when it's your own money and you are looking for your first car what do you buy? Most of us don't rush out to buy a train. We buy a car, and work our way up the brands and pricing curve depending on our aspirations and life style. Maybe we'll buy trucks for our business, or even use railway freight services. But the NC is a large scale solution which doesn't scale down. That's one reason why it's never been successful. The other is, that as a computing platform, compared to a PC, it's not even on the same planet, let alone in the same race.
OK so why am I saying that Sun Microsystems could become a world class PC player, if it chose to do this. And why haven't they done so before?
Sun does know rather more about the insides of a PC than most of the companies which currently make them.
If you add to these undoubted technical capabilities, their manufacturing strength:- the fact that they can make money out of monitors and NC's which have a lower price point than a PC. And their undoubted marketing abilities:- Sun have been marketing via the web directly to end-users longer than most of their competitors in the PC business. The web paradigm which scares most PC companies (except Dell) is already part of Sun's toolkit.
As we know, almost anyone can build a PC, and Sun has many attributes which would make them a perfect PC supplier. So why don't they do it. Let's look first of all, at why they haven't done it earlier.
In the period 1987 to 1998 Sun positively benefitted from not making PC's. Not making PC's gave them the following competitive advantages.
If we look at Sun's options in 2,000 Sun has already established itself firmly as the #1 supplier of choice in the fast ecommerce server market. Profit margins in this segment are good, and the prospects for growth look solid for a least a couple more years. So Sun can afford to ignore the desktop for a little while longer, because from a business point of view, it currently has more attractive options.
However, what will happen is that a generation of MIS managers will come up the ranks of their organizations who have only ever known Intel architecture PC's and servers. Whether they are running Solaris on multiprocessor Intel servers, or Linux, or NT, the mid range will be squeezed hard and while SPARC will remain competitive in this area, the brand awareness of SPARC versus Intel could prove to be more important in that market space than any other consideration. That's why it's important for Sun to brand itself and its technologies strongly today for tomorrow's markets.
The channel conflict idea is still an important factor. The most successful PC companies are abandoning the their channels and selling direct. So implementing a successful PC strategy could put jeopardise a channel model which has worked very well for Sun in the past.
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|Next month's View from the Hill will suggest:-||For large systems, Solaris on SPARC will continue to be a better choice than NT for many years. These are the real reasons why...|
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