It looks as if they can't leverage EXISTING resources, they have to add. That's not atypical, in fact its the norm. If they could leverage the operations, the return on CAPITAL would rise, and it isn't. But this may be just a lull.
Well then, I think this just leads back to the basic bone of contention. From a Sun shareholder's point of view (or at least my point of view) it had better just be a lull, because all the spending that's been going on (Forte, StarDivision, whatever else) has been done with the purpose of establishing precisely a more highly leveraged model, the same one you're predicting for M$FT in 3 years, only better because in the Sun vision, Sun owns the big servers the model runs on, and the end-user's costs that make up M$FT's highly leveraged profits are presented to the him as, at least in part, free; buried into an all encompassing hardware/software/services solution which Sun and some combination of partners will offer (and M$FT will too or be out of business).
If Sun doesn't have that framework together in the 3 years you're talking about, their margin will be zero. I am waiting with baited breath to see all this acquisition spending they are doing and have done translate into not just new products, but a new business model with higher margins. Everybody's gunning for the ideal, the most highly leveraged model of all: get a little taste anytime anybody does anything. It's a matter of who gets closer first with their respective approaches IMHO.
Thanks for your answer.
--QS |
