Mike Lehman, CFO, presented for Sun Microsystems and was ready to talk about the “new Sun” and the Network is the Computer, the connected society… Oh boy…
There was a complete review of the company plans in April with the new management team and they feel they now have a clear and desirable strategy. Four new products this year already have a $990M run rate. Most feel they are gaining share in servers. Company hasn’t been able to say that since 2000.
Even though IT spending overall isn’t growing Sun is focused on companies that are investing in the network and that growth is much higher than anywhere else. The claim is that they are focused on customers using IT as a competitive weapon and meeting customers on their turf which is something that other server vendors don’t do.
Also trying to take a page out of the EMC play book and claim that they will run on any hardware including HP and IBM to give customers an integrated enviroment. For some reason they claim that they are the only systems vendor with an OS of their own. This is true vis a vis Dell it is less valid when talking about IBM or HP, let alone service products from Amazon or Google.
The Sun Fire X4500 Data Server appears to be doing well. Capacity of 24TB fits in a 4RU form factor and breaks the $2/GB price/performance line.
Company plans to generate 4% operating margin in Q4. Investors still seem concerned about cost reduction and efficiency. There’s a story about how they reviewed everything but it still feels much like those IBM reviews pre-Gerstner. Too many senior smart guys in love with all their projects and not able to be ruthless about making the hard choices. Schwartz probably isn’t the guy to get that done. The language remains along the lines of not “cutting too deeply” given all the great opportunity they have…
The returns from investments in open source come from allowing potential customers to try the products and then follow up with real sales. It attracts customers.
YouTube developed on an non-Sun platform and they totally missed it. By making Solaris open source this should not happen in the future. Took Sun 3 years to engineer out code in Solaris they didn’t own in order to make it open source.
In the end investors are still a little unclear regarding what Sun’s role will be in the enterprise and how their strategy translates into sustainable improvements in growth and margins.