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To: Keith Hankin who wrote (17912)	3/6/1998 4:14:00 PM
From: John Donahoe	Respond to of 24154

"They use more advanced technology to get better performance, which is what is demanded by their customer-base, who are willing to pay more for it." Let's say you are a manager for a engineering department. You have been given a capital expenditure budget to invest in CAD tools for your department. You have enough money to buy each of your engineers a low end WINTEL PC/workstation but not enough to buy them a high end SUN Workstation. Lets say you have enough money to buy 25% of your engineers the SUN work station. But that would leave the remaining engineers with out dated 486 PC. Which way do you go? Buy all engineers a low end WINTEL PC Work Station or 1/4 of them a high end SUN WS? These are real world decisions that are being made every day. JD

To: Keith Hankin who wrote (17912)	3/6/1998 4:42:00 PM
From: Reginald Middleton	Read Replies (1) \| Respond to of 24154

<Sun is not really selling to the same customer-base as MSFT anyways, and never has.> Well then why is Sun dropping the prices of thier low and mid end worksations? Exactly whose market do you think 333Mhz dual Pentium II worksations with NTW for $2800 are eating in to? Sun is losing share on the low to mid end (especially in the NY financial services area) and they are fighting to compensate on the high end where they can take advantage of the changing of the guard - where they are going to meet stiff compensation from Wintel Merced. <But a major reason that their machines haven't been as cheap is because they cost more to make. > Which would not be the case if they went for volume in lieu of margin. <Basically, your argument seems to be that they should completely change the business that they are in: become a PC company, not an enterprise server/workstation company.> No, they should listen to thier market. It just so happens that the marekt wants cheap, fast PCs with a lot of cheap software and third party support. Here comes Dell adn Compaq. Sun has a chance to prevent market share deterioration, but it can't happen at high margins. Remember what you said about Apples inability to give up margin in order to cannabilize thier own product? Well, Sun and ORCL seem to have the same problem. Silly as it may sound, history does repeat itself. Some say Wintel is a monopoly, big fat and lazy - notice how they have no problem cannibilizing a market segment in order to keep competition out, thereby retaining safety and lowering prices as a whole. Notice what is happening to the price of 333Mhz chips, now a commodity what just a few months ago was a crwon jewel. INTC's revenues and margins take a hit, but they flood the market form low to high end with a proprietary socket architecture, mucho speed and force thier blood red closest competitor out. Then comes teh fat margins and juicy revenues again. Andy should take over sun adn ORCL and teach them how it is done.