Kealoha, I have heard stories of accelerating attrition at AMD, but can't substantiate, so will leave it to others that may have some real data. Why I really posted was to bring in "yet another article on why Wintel may sink Sun Microsystems." Sun business, or some of it, would be a nice plum to get. Dog eat dog, you know.
I highlighted an early paragraph for a person who seemed a bit skeptical in a post yesterday about NT catching on. Hi Charles. Not that the author here knows it all, either. FWIW.
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Cloudy Forecast For Sun
Company feels effects of
Wintel-less strategy
David Einstein, San Francisco Chronicle Staff Writer
Thursday, July 9, 1998
Could Sun Microsystems become the
next big victim of the Microsoft-Intel
blitzkrieg?
Quite possibly, say some analysts who
see Sun as a valiant but overmatched
computer-maker trying to push its own
technology in a world increasingly
dominated by Microsoft Windows and
Intel chips.
Sun, for those who don't know, makes
desktop workstations for heavy
computing tasks like computer-aided
engineering, and high-end servers used
to manage corporate networks. It also
is the company behind Java, the
popular development software for the
Internet.
What sets Sun apart from most other
computer-makers is the fact that it
relies totally on its own own chips and
operating system. None of its
computers use Intel chips, and they
won't run Microsoft Windows NT,
which has become the operating system
of choice for corporate networks.
Other big computer-makers, such as
IBM, Compaq and Hewlett-Packard,
have their own proprietary systems,
but they also offer Wintel computers to
reach a larger market.
So far, Sun's individualistic approach
has proven successful, with steady
growth and annual revenues
approaching $10 billion. It is the
leading maker of workstations, and
demand continues for its powerful
Starfire servers. Analysts also praise a
strong management team that includes
Chief Executive Officer Scott
McNealy, Chief Operating Officer Ed
Zander and Alan Baratz, who heads up
the Java effort.
However, recent signs suggest Sun may
be entering a period of extreme
vulnerability to the forces that have
battered other companies, such as
Apple and Silicon Graphics, which
have tried to prosper without
embracing either Microsoft or Intel.
Sun's stock, which reached an all-time
high of $53.31 last August, has
languished in the $40s for most of the
past four months, a sign of uncertainty
on the part of investors. It closed
yesterday at $45.50, up $2.56.
Among recent developments:
-- Personal computers are displacing
workstations in corporations, and
inexpensive desktop terminals using
Microsoft Windows NT appear to be
gaining acceptance in the corporate
market faster than ''network
computers'' such as Sun's JavaStation.
-- Powerful PCs boasting Intel's new
Xeon chips could rival the power of
Sun's high-end servers while costing
less.
-- Last week, Sun announced its first
layoffs since 1994 -- 200 out of 13,000
Bay Area jobs -- as part of a
reorganization in which it will
eliminate individual operating units in
favor of two divisions, one for
products and technology and one for
services.
Analyst Rob Enderle of Giga
Information Group makes no bones
about his fear for Sun, saying, ''In our
view, it's the next Apple.
''The company has just been lucky that
they're in areas where Microsoft and
Intel haven't competed until recently.''
Sun's best long-term strategy, said
Enderle, would be to abandon its
go-it-alone strategy and start building
computers that use Intel chips and can
run Windows NT. SGI made that
decision last fall, after other attempts
to turn around the company failed. It's
too soon to tell whether that strategy
will help SGI, which hasn't yet started
selling Wintel workstations.
However, Sun is unlikely to adopt the
Wintel platform, partly because of
McNealy's hatred of Microsoft. ''Sun
has used Microsoft as a foil for so long
that it would require the departure of
McNealy for them to move back into
the mainstream,'' said Enderle.
Asked about the possibility of
embracing Wintel, Zander said, ''It'll
be a real cold day in whatever.'' Sun is
doing just fine on its own, he said, and
besides, the Wintel market is already
so crowded that only one company --
Dell -- seems able to turn a decent
profit from it.
''All the money in the Wintel space is
being made by Microsoft and Intel,''
Zander said. ''Why would I want to do
Wintel if nobody is proving able to
make money on it?''
Even if Sun joined the Wintel
bandwagon, it's unclear how it could
differentiate itself from the rest of the
crowd. SGI might gain an edge by
wedding its superior video technology
to Windows NT. Sun has no such
advantage.
Sun had hoped to slow the Microsoft-
Intel assault on the corporate desktop
with the JavaStation. But the small,
blue units shipped a year behind
schedule, and have been a marketing
disappointment. FedEx and
1-800-Flowers, two big companies
Sun had counted on to embrace the
JavaStation, have opted instead for
Windows terminals.
''Sun may have shot itself in the foot by
building up expectations for the
JavaStation and not delivering on
them,'' said analyst Gregg Blatnik of
Zona Research. ''They took much
longer than anyone including
themselves anticipated in getting it to
market, and there's not a lot that
indicates a large demand for it.''
Zander conceded ''We did not execute
as well as we could have on getting the
software and some of the hardware
specifics right.'' But he vowed that by
next year, some major companies will
be choosing JavaStations for limited
applications such as airline
reservations or customer service.
The threat to Sun may even be greater
at the high end, because that's where
the largest profit margins are.
Networks servers from Sun, IBM, HP
and others start at a half-million
dollars and are used, for example, to
run complex databases, execute
financial transactions and keep track of
inventories.
If Microsoft and Intel succeed in
commandeering the network server
business, it could cut into Sun's core
workstation business if companies
wanted the same technology throughout
their business.
''Life will get tougher for Sun as
desktop and server systems with Intel
architecture and Microsoft NT move
further and further into territory that
Sun may have had exclusively a few
years ago,'' said Blatnik.
Nor can Sun count on Java -- one of
many software tools to bring animation
to Web pages and make them
interactive -- as a major source of
revenue.
But Sun hopes that Java -- which lets
different kinds of computers work
together -- would help its business by
making Sun computers compatible with
Wintel systems.
Further muddying the situation is Sun's
legal dispute with Microsoft, which
has put its own version of Java into its
Web browser. The outcome of that
case could determine the extent that
companies can modify Java in their
own products -- possibly diluting Sun's
control even further.
Sun's main advantage at this point is
the size of its customer base. For
example, Internet service providers
use Sun servers to manage more than
half of all Web traffic.
''Sun has done very well getting in
there, and once you're in it's very hard
to get you out,'' said Blatnik.
But an early lead in the rapidly
changing technology business is no
guarantee of succes. After all,
Netscape once had a commanding lead
in Web browsers, and Novell owned
the network operating system market,
and look what happened to them.
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