Kemble,
Hi. Saw this on the SUNW thread...IMO a very insightful post...
You can't win them all. As you may have realized by now, I like MSFT and Sun as investments, but they both have an awful to lose by this pesky little Internet thing. To be honest, I think Sun has more to lose than MSFT.
Everybody seems to agree that the Merced will outperform the Sparc III chip, if not immediately then within an iteration or two. We all know that Sun has agreed to adopt the Merced as a platform for Solaris. Well, doesn't that leave Sun in a predicament. Sun's strength is medium to big iron (it used to be little iron, but I think NT4/PII/IIIs did that in). Once you commoditize the components of big iron, you change the whole ball game. I can tell you now, Dell will murderize Sun in the high volume low margin game, and that's exactly what the Merced/Win 2000 (Wintel) combo will do to big power machines. More companies will be able to afford them, they will move up the food chain, the margins will reduce, and the volume will increase (tell me you haven't heard this story before - all the naysayers said the Intel chips and Windows will never encroach upon the Unix workstation/server space - someone better tell that to the NT team). Well, Sun can always focus more on Software and system architecture. Software - I wouldn't want to bet on them versus MSFT. System architecture - sure they could put out some high end stuff, but Dell is a technology reseller for IBM now. IBM knows the big iron tech, Dell has untouchable logistics. Then there is Compaq, who doesn't touch the efficiency of the IBM/Dell game, but is more experienced at low margin sales than Sun. Sun may be able to beat Compaq, but "Big Steel" Dell machines bolstered by IBM tech, with Dell's logistics on 2 Gigahertz Merceds, running "everything bundled in Windows" damn near sold through the web with bleeding edge logistics and execution... Sun may be very well outclassed on this one. This technology progression will hurt everybody who has a strong existing franchise in and established yet transforming paradigm - not just MSFT, but Sun and Intel as well. Intel seems to have already fought off their demons (ask AMD's CFO, if he can see through the red ink on his glasses), but it would be foolish to say that this internet thing, free OSs, and the commodization of their cash cow product didn't ruin Thanksgiving dinner.
Kemble....I've been reading this new acronym a lot lately...."WINTEL/DELL"...seems like DELL is being recognized for the force they are...and are growing into.
Your vision of DELL being the next DELL seems to be right on track...thanks to their unbeatable business model, and great management.
Steve |
