Into the ‘Big Blue’ sea...

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Another strategy of Sun that has got its bottom lines bleeding is the developing of free, “open-source” software and the generous giving away of its prized software products under spur sale for peanuts to boost the adoption of its software by the target audience. “In general, Sun has been stuck in a transition between a hardware-centric and a software-centric model and getting stuck in the middle is suicide in any market; in this market, it’s almost instant suicide,” supports Rob Enderle, President and Principal analyst, Enderle Group. Moreover, the factor that has added to the growing predicaments of Sun is that those products, where it bet its money – open-source software, new server and storage systems and new processors; have failed to generate the required responses.

That explains the debacle in the server space. Sun, the famed ‘dot in dotcom’, and popular for its servers in those days, owns only 10.1% of the worldwide server market, while HP holds 30% and IBM leads the pack with nearly 32% (IDC). With the continually shrinking market of Unix operating system dominated by Sun, HP and IBM are clearly taking the honours in the server space.

And now its currently dire financial state has got traditional foe IBM discussing a prospective purchase of Sun’s properties for an approximate $6.5 billion. “I don’t think this will be a company purchase, more of an asset purchase, so conflicting offerings will likely get killed rather quickly. I don’t expect many of the Sun hardware products to survive,” predicts Enderle. Moreover, IBM could use a number of Sun properties to enhance their cloud platform, move back to market leadership in server share, and also ensure that another SCO like event doesn’t occur. “IBM is not and should not attempt to reverse any existing Sun weaknesses. IBM will most likely take the best of the cloud technology, Java and the exceptional talent; replace existing management and fold technical, technology, service and product teams into the IBM environment as quickly as possible. Except among die-hard fantasists, any emotional attachment to Sun has long since been ‘burned’ out,” avers Richard L. Ptak, Co-founder and Managing Partner, Ptak, Noel & Associates LLC. So many jobs at Sun could be rescued. But it certainly seems to be the end of the road now for the Sun of Silicon Valley.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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