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To: Amy J who wrote (114684)	10/22/2000 1:14:34 AM
From: Tony Viola	Respond to of 186894

Amy, >RE: "Sun's product revenue was flat." With all the hype, I rather doubt the reports will mention this. It's one of the first things I noticed in their report, except I had to dig it out for myself. What's up with that: We get hammered for up only 5% sequentially, Sun is flat and comes out smelling like a rose. Tony

To: Amy J who wrote (114684)	10/22/2000 2:07:20 AM
From: rudedog	Respond to of 186894

Amy - good questions. CPQ services cover the whole of their high end, so they have a larger revenue base to work from, over $5B a quarter. But I think the real answer to your question is that SUNW's service organization is WAY too small, and the field performance bears that out. While SUNW has been aggressively staffing up - they have doubled the size of that team in the last 12 months - it is very hard to grow a services organization organically. People forget that SUNW has not been in the server business very long. They had no server products at all in 1990, and servers were still less than 20% of their revenue in 1995. They depended for the most part on the service capabilities of their channel partners and their customers. CPQ was in similar shape, but chose to buy services capability. One only has to compare the services capabilities of HP, IBM and CPQ to SUNW to see that SUNW is the odd man out. My own opinion is that IBM is too heavy in services, CPQ and HP are about right, and SUNW is way too lean. But IBM is trying to build up services as their core business, while CPQ and HP use services primarily to leverage system sales. As far as SUNW's growth, some analysts have mentioned that SUNW's sequential product revenue growth was .4% - which is pretty close to flat. But in the general celebration of their profit numbers and year over year growth, that seems to have gotten little play. Intel, IBM, and DELL got clobbered primarily because of revenue growth, and all three companies had an order of magnitude better sequential growth than SUNW. Go figure.