Hight-Tech East:
> Sun Microsystems SUNW ranks 5th of 100 in largest % of net profit
> from "foreign." Any analysis you can offer?
There are many things we take as granted in the US, one of them being the adoption of the newer technology more quickly than anywhere else on the face of the earth. This may have to do with the strength of our economy which causes corporate America as well as regular consumers to afford paying for the technological changes which ultimately results in a better productive (and as a result more economically prosperous) environment. While the concept of client server is nothing new to corporate America, it is still a brand new technology for many foreign corporations outside of the US. These countries include those in Europe (both west and east but especially eastern Europe), Asia, South Africa and Middle East. A couple of years ago Gartner Research group did a study and found out that on a gobal basis (excluding the US) 40-60% of all foreign corporations outside the US have not yet adopted the client-server concept and were still basically following a mainframe centric model. This was not due to their lack of understanding but simply because they could not afford the change.
The change in technology requires strong economic foundations. On a global basis practically every country (well most countries) are experiencing low rate of inflation and strong growth similar to how the US started being in 1994 continuing through present time. As more foreign corporations prosper because of the strength in their local economy the more they are willing to pay for the newer technological changes. This starts a chain reaction and a cycle because the quicker they adopt the newer technology the more productive they become causing their revenues to grow even higher and enabling them to adopt the newer technology and so on. Companies such as Sun that hold the raw technology for this transformation to take place are experiencing (and will continue to do so) strong demands for their products. In the case of Sun it is their servers which is the raw factor in going toward a client-server centric environment and away from the old mainframe infrastructure most foreign corporations continue to possess.
The key here is productivity. As it has been proven in the US economy as technology improves the rate of productivity increases and thus offsetting any inflationary pressures and generating huge revenues for those who can adopt the newer technology quicker and more efficiently than others. You have 2 sets of countries: those that have been chained to the old technology for a long time and have just started to adopt the newer concepts in mass numbers (e.g. South Africa, Middle East, Europe), and those that have been up to date with the latest technology and are even willing to take more chances with even the technology that has not yet been proven by mass markets to provide optimum productivity. An example would be Japan. Japan is one of the countries that is a strong believer of the direct relationship technology has with productivity, and because of this strong belief Japanese corporation are even willing to adopt the latest technological changes before they are proven by the mass market. If you follow Sun you would notice that for example the concept of NCs has long been accepted by Japanese corporations than the US companies (and NCs and this whole idea of thin client is becoming very popular among Japanese corporations - 6-9 months ahead of the concept to take off in the US, in my opinion of course). Practically all server makers are experiencing huge demands for their products oversees than ever before (e.g. From Sun the leader of the pact to IBM, HP and to smaller ones such as Auspex). The world is indeed becoming a much smaller place to live because of the information processing age. In such an information age servers are the most crucial factors forming the foundation of such environments.
I believe Sun Microsystems as a raw technology provider is in an even greater position to enjoy a healthy and wealthy growth from foreign markets than ever before and because of its leadership as the definer of the new computing model, I believe its growth from foreign markets will grow more rapidly than its growth within the US. If you notice the value of dollar to most foreign currencies (e.g. Yen) was much higher at the beginning of the second quarter through middle of the quarter. However, while this currency valuation did hurt most high techs, server makers (and especially Sun) not only were not hurt but experienced record revenue growth from oversees. Now with dollar at or near its low levels in almost a year, I believe these companies will experience an even much more demand for their products.
Regards,
Addi Jamshidi |
