Just got back from SF, where the Intel Sales and Marketing Conference (ISMC) was held, and a bit jetlagged, but I'll post what I can on what I heard
there.
I'll concentrate on SUN in this post, and then on Network Processors and Optical in the next posts (in a while).
So... SUN.
The biggest threat to Intel is Sun. AMD may be a competitior in the enterprise space eventually, but any design wins lost to AMD are relatively easily
won back. Right now, AMD have virtually zero market segment share there.
An enterprise design win at an end user lost to Sun is very hard to win back, since the effort and expense to invest in Solaris expertise is considerable, and
the incumbent decision maker who chose Sun is always looking to justify the choice by referring to "Stability", "Scaleability" and "Upgradeability".
Designing out Sun is a tough job.
Two years ago, Intel started two new groups (these aren't the actual names):
1: The Solutions Group.
Charter: To develop enterprise hardened solutions based on IA (Intel Architecture: Xeon and Itanium) and prove them to be Stable, Scaleable and
Upgradeable. Other goals were to tune the performance of these apps so that they would run better on IA.
2: The Solutions Channels Group
Charter: To enable new channels to sell Intel based enterprise solutions (eg: PwC), and to partner with the big enterprise software vendors to port their
apps over to IA, and to liase more closely with the major OEMs (Bull, Compaq, Dell, FSC, HP, IBM, NEC etc) to sell IA.
Two years later, the results have been, quite frankly, amazing.
Strategic relationships with Ariba, BEA (WebLogic), I2, IBM (Websphere), MS, Oracle, SAP, etc etc. All of these companies are porting, or have ported
their apps to Xeon and Itanium, and are selling IA solutions into the enterprise.
I think that the most important endorsement of IA is from Larry Ellison:
"in a couple of years it's not inconceivable that we could be recommending (Intel-based servers) for everything," Ellison said. "It's not out of the
question."
infoworld.com
I get the status report from the guy that runs the programme to partner with the software vendors and the
OEMs and SIs (System Integrators).
That tells me, and was shown last week at the ISMC, that Intel based solutions won about $1.5B of business from Sun last year, which if you average the
prices of the Sun based solutions that we were competing against, wiped about $4.5B from Sun's top line last year.
The goal in 2002 is to double that.
Sun have a bunch of smart guys at the top, no doubt about it. Their biggest problem is that they hate Microsoft with such a passion that they ignore the
basic strategic thinking that will drive Sun forward, and fritter away money and manpower on useless initiatives like "Thin Clients" (a complete failure
when judged by the goal to replace PCs), "StarOffice" (a complete failure to make any dent in MS's "Office" revenue),and PicoJava, Majjic etc which are
making them no money whatsoever.
A history lesson:
Sun (Stanford University Networks) were founded to make workstations. When the Pentium Pro and Win NT started to eat into that market and
commoditise that market, they went upmarket into servers very early, which was a great move. When the Xeon processors started to move into the
Server market and commoditise that market, then they moved very early into the Telco space, which was a great move.
Now Intel are moving into the Telco space with carrier grade NEBS compliant servers, where do they have to go next? Their processors are
underperforming, and their servers are overpriced.
Services?
McNeally is on record as saying that "Services are where old computer companies go to die". Hardly a ringing endoresement for the services business.
Storage?
Maybe...forecast to grow at 17-20% CAGR. Could be good, but have they the bottle to withdraw from the server business?
I don't think that Sun have anywhere to go but down. They may have made hay while the dot.com boom was in it's prime, but have no growth path to
follow. Strangely, the recession has been very good for IA based servers, as CIO's budgets are squeezed, and they explore IA servers as an alternative,
and find out that they work as well for about a third of the price.
Sun advocates will tell you that Windows is unreliable, Linux is a niche, the good days are just around the corner.
I just don't believe it. Where is the highly profitable growth market for Sun, at the levels of margin that Sun needs to finance R&D into CPUs, Solaris and
all the hardware.
I can't see it going well for Sun. Where are they going to go now?
Cheers, Will
**courtesy of PoorBloke on the Fool.com Intel board** |
