layer-8
Wednesday, April 12, 2006
  Sun, Apple, and the Fortune 500
Ben Rockwood mentioned that the Fortune 500 list for 2006 is now online, and commented that Sun's position, at #211, is still impressive.

Sun's position is indeed relevant, even slipping from #194 last year, #211 still makes you a very large and very relevant company. Still, it means that Sun is below Apple (which it wasn't in 2005), and profit figures aren't impressive, either, with Sun reporting a 107 M$ loss that places it at #36 in the "Losers" category.

Blame Nick Carr or not, IT, especially hardware and operating systems, is indeed seen by many managers as a commodity of sorts. It's up to the challengers to change that perception - not the incumbents. So HP and Dell can play along with the "commodity" approach and still profit from it, while Sun and Apple can not.

Apple has done a pretty good job at it; it's very easy for the consumer to distinguish from an Apple product and a non-Apple product, they have a different perceived-value, thanks to marketing but also to some true innovation and design.

When it comes to Sun, I talk to a lot of people that really find little subjective difference between Unix boxes, they are ready to choose Sun or IBM or HP based on reasons other that the platform's merit. They are often wrong, but it's not a trivial task to prove them wrong before they make their decision. IBM and HP have a lot of success stories they can come in and tell you. In the end, the decision is based on price, on "synergies" (whatever they may be, real or not) and on "ability to deliver on time".

What is Sun going to do about it? What makes a Sun product better than its competition? And does the average CIO know about that?
Those are the questions that will define Sun's rank in the Fortune 500 2006 list.
 
Comments:
What puts Sun in a tough spot is that unlike Dell, Apple, IBM, and HP, it has no position in the general consumer market. Ultra 20 was the first sort of step in that direction, but it was still aimed more toward SOHO and corperations than John Doe. When you seperate what you know of Sun and their business from whats on paper questions start to arise... namely, why hasn't Sun monitized Java more effeciently? Java is running everywhere... but are they getting a cut of that action? Generally, no. And in a practical sense we know why, but financially its a big looming question.

Galaxy is doing wonders for the product line and range of market exposure, so I'm hoping will see a big pickup here in calander Q2 and Q3.
 
I agree with the comment on Sun's lack of ability to monetize most of what comes out of the labs, especially Java.

Sun is indeed trying to move into the general consumer market but it will not be an easy road, in many aspects:

1. Desktops. Desktops are brands that sit on people's desks. Desktops are small investments that sysadmins may leverage into server sales ("Why don't we buy a Sun server? We're their customers already, we bought a desktop from them last April, and it works really well" sort of argument, flawed, but still an argument)

2. Support. People want support for a number of things, including operating systems. If you are in the volume server market, some of those machines will be running Windows. What kind of Windows support infrastructure does Sun have? Is Sun still going to stick to the old "oh, that's a software problem, we can't change it in hardware, you shouldn't be running Windows at all, it causes all kinds of problems" approach? Dell, HP, IBM, they're all more than willing to support Windows on their machines, and not complain about the operating system...

3. Price. Sun prices for x86 servers have been excellent, but the real issue comes when you want to buy the rest of your infrastructure. Even a Sun rack costs twice as much as a Dell rack. And prices do come down if you put a large order through, not quite so if you're buying your servers one-at-a-time (capacity Just-In-Time, of sorts).

In the end, I do hope Sun is getting it right this time; we've been sharing the same roads for a long time, and the market would never be the same without them.
 
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