This is from The street.com
Vs. Microsoft: The Sun Still Sets
By Cate T. Corcoran
Special to TheStreet.com
8/8/98 12:17 AM ET
MENLO PARK, Calif. -- Times have changed in the halls of
what used to be SunSoft, the software arm of Sun
Microsystems (SUNW:Nasdaq). Gone are the cute cartoons
and quirky private jokes that used to clutter the office doors
and cube walls. John McFarlane, the head of the newly
reorganized and renamed Solaris Software Division, is no
old Sun-hand, but came over from Northern Telecom
(NT:NYSE) a year ago. Missing are the jokes of his
predecessors, the fire, the sense that -- bam! sock! pow! --
Sun is going to break Microsoft's (MSFT:Nasdaq) knees. Or
at least have a grin-inducing good time talking about it.
All this has been replaced by a cleaner, nicer, gentler Sun.
One that looks as though it will soon gracefully concede the
server market to Microsoft and Intel (INTC:Nasdaq).
Sun is the last holdout, the leader in its field. But it doesn't
seem to be able to stave off NT advances much longer. "Sun
is being pushed up a pole as the NT termites gnaw beneath
its feet," says Maureen O'Gara, Unix analyst and publisher
of the Unigram X. Analyst Rob Enderle of Giga Information
Group recently dismissed the company as the "next Apple"
(AAPL:Nasdaq). Shares of Sun seem to rally now merely on
hope that someone like IBM (IBM:NYSE) will take them out.
This week, that old saw surfaced again in a Dow Jones News
Service report, and the stock rallied from a recent dip of 45
7/16 to close at 48 7/8 on Thursday.
It will only be a matter of time -- O'Gara predicts three years
-- before NT swamps Sun on the ground. Sun used to own
the midrange and high-end server and workstation market.
But despite Unix's strengths -- it's more mature, scalable
and reliable than NT -- businesses are eager to adopt
Intel-NT servers and workstations. Why? NT systems are
easier to use than Unix, they work well with Windows PCs
and they offer better price performance.
And, most important, the applications will be there soon,
thanks to a little strong-arming from Redmond. If Windows
developers want their Windows-compliant seal-of-approval
stickers from Microsoft, they have to port to NT too. Key
enterprise software makers Baan (BAANF:Nasdaq),
PeopleSoft (PSFT:Nasdaq) and SAP (SAP:NYSE ADR)
started to move their high-end applications to NT on Intel
about a year ago. That means the Fortune 500 will soon be
able to run their businesses on NT-Intel machines.
Sun's reign as the king of the workstation-server market is
coming to an end. So the company's making changes:
Sun recently reorganized, consolidating its separate
operating companies into more unified divisions that share
one sales force.
The company is going much more heavily into middleware
and tools, such as Java and the new Jini networking
software.
Sun is championing Java in consumer devices such as
set-top boxes, pagers and cars.
The company is pushing its Solaris operating system on
Intel in the hopes that it can compete more effectively
against NT on Intel than its proprietary Sparc hardware.
Will the new plan work? To give credit where it's due, Sun is
reacting a lot faster and more efficiently than Apple ever did
to Microsoft. But unless it pulls off a surprise hit, Sun's going
to be hunting on a much smaller patch of ground.
The bad news seems to outweigh the good. The company
doesn't see much revenue from Java, which is turning out to
be something of a disappointment anyway. Java has run up
against the limits of network bandwidth, not to mention a
lack of truly useful applications. And Sun's promise that Java
will be a "write-once-run-anywhere" program has turned out
to be hollow. All these problems have kept Java from
becoming a viable alternative to the PC desktop, at least for
the foreseeable future.
Jini is the logical extension of Java into a network.
Announced last month, it was immediately overhyped by the
press as the next Microsoft-killer. But until some companies
actually try it out (the source code and licensing model are
due any day now), it's impossible to say how much of Jini is
pipe dream and how much is reality. "Jini sounds like a good
idea, it sounds threatening, but will it turn out to be the same
kind of situation as Java is?" asks O'Gara. "Java hasn't
panned out. It isn't what they said it was going to be."
Jini is full of unknowns. Jini devices might offer only a limited
subset of the functionality currently available over LAN
networks. It might not be widely adopted, which would limit
its usefulness. It might not really interoperate with the
Windows world, which would limit its usefulness. On the
other hand, if Jini is successful, it could bring a
much-needed revenue stream into Sun. But even here, a
cloud already looms. Hewlett-Packard (HWP:NYSE) has
stolen some of Sun's thunder by cloning the money-making
Java Virtual Machine all Jini devices will need.
In the world of Web servers, Sun is working hard to maintain
its lead. But Microsoft, Linux and others are hot on its heels.
So far, customer reaction to Solaris on Intel has been tepid,
even after several years in the market. The JavaStation has
been plagued with delays and problems, and key customers
such as Federal Express (FDX:NYSE) have chosen
Windows terminals instead. "Sun and others got it wrong out
of the chute," McFarlane admits, adding that the thin-client
paradigm is still alive and well in other forms. But NTs have
mostly turned out to be replacements for the small
dumb-terminal market.
Fortunately, middleware -- particularly Internet tools --
appears to be one potentially bright spot for Sun. True, they
will be competing head-on with Microsoft and many others,
but at least the market is still somewhat up for grabs. Sun is
off to a good start with its recent acquisition of a little-known
but very successful Internet tools company called
NetDynamics.
If anything, Sun appears relatively sanguine about the
wrenching changes in its future. When queried about
Microsoft's tactics, McFarlane replies that Microsoft might
have crossed a boundary by illegally tying its products, but
that there's nothing wrong with aggression or bundling per
se. What's more, Microsoft has great marketing. ...
Windows is a fact of life. ... and Sun needs to work with
Microsoft products. ... What? Come again? These
even-handed comments don't sound anything like the Sun of
old.
That's right, says McFarlane. "I think you're going to see a
lot more from Sun in terms of our posture publicly of let's just
get out and do business, let's go do what customers want,
let's solve market needs and let's stop trashing people."
But what about Scott McNealy's famously outrageous barbs
and jabs at Microsoft? The day after Bill Gates complained
that the Justice Department's demands were analogous to
requiring Coke (KO:NYSE) to sell a bottle of Pepsi in every
six pack, McNealy quipped that using Microsoft's version of
Java was like drinking Coke with Drano.
"Oh, Scott's still going to be Scott," McFarlane says. "Scott
gets a lot of great press for us. [But] that's the reality of
being a large successful enterprise supplier, is that
customers expect you to work with their other key-enterprise
vendors." That's evolution, says McFarlane, who reads
books about paleontology and history to relax. One of his
favorites is It's a Wonderful Life, by Stephen Jay Gould,
which describes the soft-bellied creatures of the
Pre-Cambrian period. They were eventually succeeded by
skeletal critters. "I think understanding humans and history
and our place in the universe is an important context to the
frenzy of our life and the frenzy of our industry," he says. "I
tend to handle stress well because I have a perspective."
Maybe it will help him keep Sun from extinction. |
