Jim, Some sketchy thoughts on HWP, SUNW, IBM, mainframes vs. midrange/desktop market.
We know that mainframe biz is shrinking and the growth is in the midrange(servers & desktops) that is more than doubling to 67M by Y2K. However, IMO, one factor to consider is the battle of UNIX vs. NT and its implication on unit pricing.
Before NT became popular, UNIX machines were starting to see price pressure as competition between HP, SUN, IBM, & SGI was heating up in mid 90s. Since then, lower-priced NT servers & desktops have been gaining popularity and market share. Nowadays, NT:UNIX sales ratio is more than 2:1.
We engineers all know that UNIX is still alive and thriving as the primary choice in the R&D, engineering, mission-critical, & enterprise applications because of its processing power and the unavailability of many high-end tools on NT. At work, we use HP9k machines but we also have a mix of NT desktops along with UNIX/NT database servers and UNIX large-scale application servers(like SAP R/3). IT mgrs use NT boxes wherever they can because of lower unit cost.
My point is that margins on UNIX-based machines have been under pressure and will approach those of NT machines as NT becomes as scalable, dependable, and reliable as UNIX in a few years. I am assuming that Merced will be released next year and INTC & MSFT's migration strategy for helping ISVs & developers to port to NT will prove successful.
That said, I have never liked SUNW (same as COMS) and I wonder if SUNW stock will be any higher two years from now.
Clint |
