Wednesday, September 24, 2003

The Sun Also Rises
Sun Microsystems recent announcement of a simplified variable cost per user pricing model for their Office Suite and middleware software is in line with the white paper I developed last year.

The white paper which is available at lays out the problems and approaches to selling technology in a world where there seems to be a surfeit of suppliers and and an absence of appetite for major technology capital investment.

The logic in short is that the world has changed. In the new IT Order,

1. There are many suppliers (Sun is competing with J2EE servers against Microsoft, Oracle, IBM and BEA)

2. There is wide choice of technology (though in the case of OpenOffice, the choice is pretty much MS-Office, increasingly part of the Windows operating environment).

3. Client companies are overwhelmed by the expertise needed to maintain their increasingly complicated systems (ERP, information warehousing and business intelligence, Sarbanes-Oxley requirements, e-commerce, managing the virtual value chain, personal computers, laptops, PDAs, cell phones, CRM, security and authentication, middleware, and the list keeps growing).

4. Business models are changing as a result, towards services, solution selling, out-tasking, integrated applications, and the modular integration of applications.

5. In fact, today, in advanced innnovative services, you are now selling business cases not technology.

6. Increasingly the impact of VoIP will be to permit a new generation of distributed services that combine voice and data applications e.g. distributed CRM.

The challenge for Sun is clearly that historically it has been a "technology push" company selling high end hardware. And while its development of Java has been enormously successful creating one of the largest and most interesting ecosystems around, something the firm often does not receive enough credit for, the challenge for Sun is: "How well can it create a more services oriented, solution oriented infrastructure and ecosystem?"

Sun certainly has formidable competition. IBM with WebSphere, DB2, the VisualAge family of development tools and a vast ecosystem of VARs and ISVs is well entrenched. Microsoft is investing in developing consulting capabilities and broadening its product line to provide core services such as accounting with the acquisition of Navistar and Great Plains.

The future increasingly looks to be a world where solutions are assembled, not built -- so while one can argue that the modular version of the future that Sun has espoused is the right direction -- the question seems to be "How fast can Sun move its culture towards customer service and solution development directly or via its ecosystem?"

My guess is that Sun can't do it by itself, but its strength will lie in certification of solutions that third parties develop. Ironically, for a company that has grown on the basis of proprietary software, the Open Software Movement may contain the solution for Sun. Ironically, IBM's brilliant move to offer Linux on all its hardware platforms represents an opportunity for Sun to become Burger King to McDonald's. Every time someone converts their software to IBM's version of Linux, it is an opportunity for Sun.

So, don't count Sun Microsystems out, IBM's move to Linux and HP's plethora of operating systems may drive software development more into the Linux/UNIX camp even as Itanium based and AMD 64 bit systems take off.

Alistair Davidson

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