Sun enters analysts' twilight zone
A series of recent reports from industry analysts are decidedly downbeat about Sun Microsystems. Things are certainly not looking good for the company, but some of the analysts’ comments appear to be a touch overstated.
Reading between the lines you could easily get the impression these people don’t think the computer maker will be around for much longer. You can read some of the analysts’ comments for yourself in our story ‘Sun faces long dark night’ on page 8.
The first sentence of the story says: “Sun Microsystems is in deep trouble”. That’s gloomy. But from there things get really negative.
Last week an equally pessimistic press release arrived from Sydney-based Intelligent Business Research Services (IBRS). Analyst Kevin McIsaac warns Sun’s systems customers it is time to reassess their relationships with the vendor. He also tells Sun’s Java customers to cut costs by using JBOSS instead of the more expensive JEE.
What’s going on?
As just about every analyst is keen to point out, Sun’s main problem lies in the way technology has become commoditised. Well yes, we’ve all known that for ages.
However Sun is pretty much the last mainstream computer maker to design its own hardware from the chips up. And Sun is sticking with its own flavour of Unix rather than offering Windows or throwing itself headlong into Linux-land.
On one level the analyst argument against Sun is this simple: we are in an era where chips can be, well, as cheap as chips and, thanks to Linux, operating systems can be even cheaper. Customers like cheap. If sexy, funky, charismatic Apple can’t avoid using commoditised hardware then no one can.
It’s a good point. But while Sun Microsystems is special, it is not Apple. Sun is a systems vendor; Apple mainly sells consumer products. Sun’s customers want a business edge over their rivals; Apple’s customers want to own stuff that is at least as cool as the stuff their friends own.
And anyway, while Apple uses standard off-the-peg components, its end-products are defiantly non-standard and despite what Apple says, they aren’t cheap either. Of course, the Mac remains a seriously better user experience than a generic PC. Apple knows how to add value.
It’s not all that long since analysts wrote Apple off. That company reinvented itself, bounced back and is once again the toast of the industry.
Sun Microsystems has the potential to do the same. Last year’s surprise acquisition of StorageTek was a step in the right direction. Let’s hope there’s more original thinking in the pipeline.