Hi Addi,
You are responding to the current herd psychology. What is "realistic" to you is always the minimal safe assumption. I think you are wrong.
About all the existing equipment: I stand by what I said before. No one is going to get serious about installing expensive servers w/o SunService supporting it. That is suicidal. Small workstations will auction for home use at bargain-basement prices & there will be a secondary market for things like replacement keyboards & monitors, but NOT SERVERS. The big margin big ticket items are going to have to stay in storage.
The USIII's are a generation ahead of the USII's and as such represent a big step forward. The only other game in town is IBM. When IT mgrs. get the go-ahead to buy more, bigger, faster, better, they are going to be placing orders with Sun in a very big way. Gross margins on these servers are going to be big as they slowly repace old, antiquated mainframe/MVS technology. Read the specs for yourself.
First of all, e-commerce is not going the way of the buggy whip. It's easy now to say that the .com's are a "flop", but the technology is advancing and the e-commerce business model is going to grow in the next 2-3 years bigger than anyone in 1995 may ever have suspected. Sun doesn't need a "new" business model.
Since you seem to like use television as an analogy, look at it this way: in the 50's the public had to be sold on the idea of going out & spending big bucks for a TV. It was crude & primitive, but the product sold like crazy because of the content (software). Lots of ideas for content were tried. Some formulas succeeded, some formulas failed. The REAL money, however wasn't made until TV lost its status as a novelty and became a commodity that just about every family in the US had to have, like a telephone.
The same thing has just happened between 1995 & 2000. The public was introduced to the internet: a new, global technology that had the potential to change the way we live & do business every single day. That's a big deal. The word got out. The hardware & content became available. People started using it & getting used to using it every day. That trend will continue.
Following on came the ideas from everyone & his brother about how to develop, format, & deliver content. Now, as the novely of the internet wears off, people slowly but surely discover what they like about it and what will sell to the public. What that means is that the public, in general, will be willing to pay either through service fees or through advertising costs to have & keep this technology. Like TV it will spell huge profits for content providers that come up with the right formula (like the TV networks did).
Sun, as an infrastructure provider is perfectly positioned to take advantage of the boom when it occurs. The "froth" that comes with that optimism drives the P/E ever-upward with the company. I don't see anything standing in the way of a $500b market cap except some negative market psychology like yours. |
