> The precipitous drop in the share price of SUNW appears to be linked
> to JAVA not producing much earnings for SUNW (this was not known to
> the WS until the contract was made public). The drop brought SUNW to
> the level of IBM's P/E.
>
Who knows what it is linked to, but if Wall street thought "revenues
from Java license" was the business model, then they just don't
know how to inhale high technology trends.
Windows ABI is a proprietary/de-facto standard and Java
is threatening to create an alternative to it. It enables
a new market where there can be competetiion and alternatives
for desktop. Just the way IBM created the PC/DOS market which
grew up to me the Windows market. Sure IBM lost control of the
software side (if it ever did have). It lost on the hardware side
but we have CPQ, DELL, GTW from the economy created by it.
Sure Sun can try to compete and lose in the "Java market" (if it
happens) to HWP, MSFT, or whoever. There are no guarantees. But to
think the the potential of Java to Sun's revenues is because of the
license fee, is to not understand enabling and creation of a new
competitive market. If "license revenues" was the business model,
Sun would not be working hard to give it away to a standards body
(with some strings so that the saboteurs don't use the standards
process to destroy/delay its potential). Maybe there are now
new question marks on the potential for that new market and the
"sabaoteurs" have gotten to it by creating a warped Java in IE and
the legal system and that represents a risk to the enabling of that
new market. But license revenues is not the game.
The IP protocol is not "owned" by anyone. No one makes license
revenues from it but it enables the market of all the companies
making money from the internet (router companies, computer companies,
phone companies) and maybe some that will make money in future
(retailers...etc).
> I still consider SUNW's current price as fair, and not a result of
> "idiotic" selling.
That may be true. But it was not because WS is shocked to learn
that there was no license revenue stream from Java licenses (atleast
I hope the analysts are smart enough to atleast know that..but
one never knows). I think Sun is undervalued right now and I
attribute zero value to the Java potential. If that happens, it is
a freebie. Just the "Internet classic" (without Java) has enough
momentum to create demand for servers. Yes NT and Wintel will
be competition but I believe Sun can compete. I hope it is
not putting all its R&D investment in the Java basket and looking
after traditional Unix and server market too. |
