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Sun Tries Subscription Software Pricing
Sequoia writes "According to this article, 'The company's new pricing model for its systems will be based on a company's employee count, as declared in a company's annual filings with government regulators. Sun will charge $100 an employee for a single package that includes an application server, a Web portal and security software, among other components -- all of which Sun executives say will work together in a more integrated fashion than they did previously.'" Sun's press information is a little more informative.
Although I hate to pay another fee, it's ridiculous that Sun can't make some money from all the Java development that goes on. Heaven knows their stock needs the influx of cash.
I think it would be great if a company would set a flat rate per-child for public and/or private schools. Ex: $300 per student for (x) amount of machines, (x) software licenses, (x) amount of time with support and upgrades.
I think a lot of school districts would jump at this idea because it will give them a total cost, instead of having to "guesstimate" at what all the hardware will cost, and the number of people they would have to hire to support systems etc.
No for large companies its hundreds of dollars per machine. They just count up the PCs and send the bill. $100 per machine would be a steal (over a 50% discount) for large companies dealing with enterprise licensing from Microsoft.
Most Web servers run Apache. You can get a more expensive web server from Sun, but does it have a significant advantage over Apache?
No problem. Companies in your scenario would opt to use traditional pricing instead. Sun is making a statement about its desired role in the IT food chain (as an integrator), without relinquishing its position as a parts supplier.
I can see how headcount pricing would encourage a company to move everyone onto the platform. As long as you're paying for it, why not have everyone use it and bring down the per-seat cost as close to $100 as possible? And the price point presumably undercuts Microsoft's bundle. So, IT wins by reducing the cost of infrastructure and Sun wins by increasing revenue and market share.
Anyway, that's Sun's story. It's true, as someone else noted, that a Linux integrator can offer the same stack for $100 per seat less than Sun. I imagine Sun's response would be that (1) they're stack is better integrated than the comparable Linux stack and (2) they don't have an ulterior motive in trying to sell you consulting services for support. (Those of you who deal with Sun can tell me if the latter point is accurate.)
I think this strategy of a "predictable" pricing is not going to work for software, esp. this late in the game of the battle of the Operating systems for desktops and severs.
In software, there are many factors that have to be considered before you buy it. And software is not individualistic like music, but has to work with the software of others in and out of your ecosystem. Therein lies the biggest hurdle for getting enough traction.
Simplistic pricing is just one factor to be considered in the evaluation. Sun is essentially betting that there is a segment of the market that is so perturbed by the M$ pricing that they will switch to Sun - even though the fact is that Sun may turn out to be more monopolistic that M$ if given a chance. Look at all the song and dance, and smoke and mirrors, Sun did when Java was young and had tremendous potential .....
My gut feeling is that people would see Superman McNealy for who he is .. just another closet Bill Gates.
To see a world in a grain of sand, and then to step back and see the beach where the sand lies
Ummmm. The last time we tried to buy some Sun servers, they were pretty freakin' expen$ive! If you aren't turning a profit off $1M systems, then you have too much dead-weight. That's what happened to DEC - too many chiefs and not enough rowers.
"No matter where you go, there you are." -- Buckaroo Banzai
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Oh, and their hardware server platforms.. and their workstations....
Sure that is a bit sarcastic, but I think I made my point.
Not detracting from what Debian is, they are just different.. for a different audience..
---- Booth was a patriot ----
They used Google as an example. 1000 people, $100/employee/yr yields $100,000/yr for the whole software stack. So wearing my manager hat that is just 2 FTE.
The alternatives (like IIS and Websphere) are interested in licensing by connected person.
So this is yet one more way to license the products sun sells. This also is a major feeder to startups. Near zero software costs for small firms.
-- Multics
how will they kill OpenOffice?
They won't.
They'll leverage it.
The first thing people discover with OpenOffice is that it's about 95% * Office97.
There are enough remaining compatibility issues with MS' products and the problem of not having the same full suite of good work-alike fonts that Sun and other vendors like Ximian - er - Novell - have been addressing.
I sympathize with Sun. I've used their products on the desktop since the mid 1980's, but these days a Linux box is on my desktop and Suns sit back in the server room. It's only a matter of time before their role there is commoditised, because that's the direction everything is going.
Whatever computer desktop exists in the future, it's going to cost less than the desktop that exists now. That has stark implications in terms of the profit margin that companies like Sun or Microsoft can hope to drum up.
In this kind of environment it's difficult for IT companies that need to find new markets where they can truly offer a value-added product.
If I were Sun, I'd be looking into embedded devices. What were servers 10-15 years ago will soon be cheap enough to buy at Walmart in a blister pack. Perhaps Jini was before its time, but the idea is correct - software for networking devices that discover their environment easily and, hopefully, securely.
"Provided by the management for your protection."
This is how it's supposed to work: the business says, "you can have it all for X price, or you can have the individual components for Y and Z prices individually." The consumer picks what's best. Everyone's happy.
It's not often that I praise Sun, but if they do what they're saying, they've given everyone a good deal. Nice job!
-Erwos
Plausible conjecture should not be misrepresented as proof positive.
I think they're banking on the fact that most companies wouldn't re-organize around a pricing scheme for a product. Heck, even if they did, then that company would go through a *lot* of effort just to be a Sun customer; my guess is if someone went through that much trouble, Sun wouldn't mind if they skipped out on some fees because, obviously, they're a committed customer!
No... the "real loss" would come from start-up types who would want to have the Sun name but not pay the Sun licensing. These companies could organize a separate business unit with a "single employee," outsource all their IT hosting/whatever to that company, and avoid the fees.
But, seriously... would one ever expect a company of that size to generate big $$$ for Sun?
Diplomacy is the art of saying, "Nice doggie!" until you can find a rock.
Screw $100 bucks a user.... If I spend $500,000 on a server with the hardware to support 4000 users, I damn sure dont want to spend another 400,000 dollars on licensing (basically nothing, air, a slip of paper). When I have to spend 300 bucks on a frikin XP Operating system, and THEN get a license just to access the server, something there is wrong (psst.. its called GREED)
No I didnt spell check this post...
If I spend $500,000 on a server with the hardware to support 4000 users, I damn sure dont want to spend another 400,000 dollars on licensing (basically nothing, air, a slip of paper).
Er, you just provided for a 4000 employee company with under a million dollars of hardware and software. What is your complaint, again?
Healthcare article at Kuro5hin
Sun gets quite a bit of revenue from their support contracts. IIRC, in my last job, the company paid something on the order of a quarter million dollars for platinum level support on the primary cluster and lesser levels of support on the various other machines. That's a quarter million per year on a few million dollars worth of hardware.
Thank you. Drive through.
No, I provided for a SERVER. Now I get the joy of spending $270 or so for a operating system for each PC...
You forego that $270 by choosing Linux or, now, Sun's Java Desktop ($50/employee above server costs).
The whole point to what Sun is doing is removing Microsoft almost entirely from the equation while putting Sun in at a lower cost. It is actually about time for a solid competitor to come forward to put Microsoft into place.
We will know Sun was successful when Microsoft lowers their pricing to match. So, if you choose, you can still get Windows XP--but for 1/3 the price!
The cost to the vendor is a whole frikin 60 cents to burn a CD
You are forgetting the R&D investment for the contents of that CD.
It isnt costing a vendor any more to have more end users access their server once its at the customer site, so why the hell do they think they are entitled to more cash?!!?
It's a licensing scheme that Sun is betting some customers will find acceptible. The key word is "bet". There is no risk-free move in business, but I think Sun is putting forth a good effort, regardless.
Healthcare article at Kuro5hin
If Sun wishes to make money the very first thing they have to do is make a true and honest assessment on the state of the market and their place in it.
For all the brilliant minds that Sun has had under their roof over the years this is the one thing that they seem completely unable to do.
Believe me, they have. I just finished watching the live video of MacNealy and Scwhartz describing the new setup, and let me tell you - it is compelling.
Not only is it significantly cheaper than the Microsoft alternative, but Sun is rolling up absolutely all the network services enterprises really need into the deal - no piecemeal approach, no more wondering if this app server is compatible with that version of the mail backbone or whatever version of the operating system. Everything is integrated and tested to work together as a complete integrated, secure, and reliable system - desktops and servers, Linux or Solaris - it will just work. (And yes, I actually think they can pull this off - they already have most of the pieces in place, so it really just takes focus and execution. Focus is now a given - I'll reserve judgment on execution...)
This is the way we *should* have been doing IT for years, but no, we still spend way too much of our time doing system administration and in-house integration just to get the basics running.
Sun's approach will dramatically cut the cost of providing the basic infrastructure services that are the foundation for the interesting stuff. Garden variety systems administration *should* go away - and smart companies will see the potential to cast off the expensive shackles of today's current environment for a far more affordable and open future.
Anyone who believes in the strength of the network approach to delivering services can only applaud Sun's announcement today - I wish them the best in the market. This is an idea whose time has come, and it is definitely the way that Linux will start to make inroads against Microsoft in real-world business environments. Linux alone had no chance - Linux with Solaris, a complete set of services, all for a very affordable price, can hardly lose.
"The future's good and the present is nothing to sneeze at." - Roblimo's last
And that's why you're not an IT manager. You see, hardware is pretty damn useless without the appropriate software to run on it. There are 2 ways to get that software:
- Write it yourself - a great idea except you have to invest hundreds of thousands of dollars to do this, as well as pay all those developers to continue supporting the software for as long as it's being used. Oh, and while it's being initially developed, of course, you're still stuck with lumps of useless hardware even though you're shelling out tens of thousands of dollars every month to develop something that will run on it.
- Buy or lease software from a commercial vendor, like Sun. Unlike the IT manager, they have more than one customer that wants this kind of software. So, their development and support costs are amortized, and they can charge less per user than it costs you to develop and support it internally. And there's also the added benefit of having all those employees that would have been stuck developing your internal application now being free to work on more useful things, like whatever products your company actually sells.
I guess the other "option" is hoping that there is already an open source/free project that exactly matches your company's needs. There aren't too many of those that I am aware of, aside from the major OS projects (i.e. Linux), Apache, Samba, and a few development tools. And many companies do take advantage of these projects when they exist. But most of the time such a project does not exist, and you're stuck with the options I've outlined above.Say I run a labor intensive production process that somewhere runs a small sun server to keep track of some data. Now a big factory like say a food processing plant can easily have a thousand + workers. Does that make for a 100.000 license fee? Each and every year? Ouch.
You see I doubt this. And those type of setups probably will be allowed to use the existing models.
But you claiming that this is better then MS because MS charges more is missing a point. MS charges for people USING the software directly. It doesn't charge you for the cleaning lady and the night guard.
If Sun really want not to loose business to linux and windows (who else can they be talking about) they need to get cracking. They make excellent high end server solutions. I wonder if this makes it affordable for a small shop to own a sun.
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