Sun Posts Increasing Loss

Chromodromic writes "Sun Microsystems posted an increasing loss at a time when many tech firms are beginning to report stable or increasing earnings and stocks are looking up. According to the Wall Street Journal, it looks like Sun, the formidable peddlers of Solaris, Java, and UltraSPARC Fire servers are facing competition from measly ol' Dell and Intel. Even Scott McNealy has been reported to concede in a May 2002 meeting with top execs that Sun has to change, including building up trust with customers that have been put off by McNealy's sometimes controversial personality and Sun's reputed internal disarray which according to Merrill Lynch is indicating that Sun requires a makeover. The Merrill Lynch report was, in fact, particularly scathing and has raised a few Wall Street eyebrows."

Comments

Not surprising

[pagz]

My university's Laboratory for Computer Science did a test between a Sun machine and a IBM compatable running linux in order to see if they could justify the cost of buying new Sun machines like they always have. IIRC the Sun machine cost five times more and performed three times worse than the IBM.

This was on running code from the profs (so research code), which is mainly what the machines would be used for.

Well they deserve it

[arvindn]

As many have noted, Sun have never formed a coherent strategy about linux. Their statements re. linux seem to be a mix of hostility, skepticism and euphoria. Also, they have a finger in every pie without a clear vision of where they want to be in a market of ups and downs. And lately they have shown that they are not above cheap marketing gimmicks either -- witness the branding of Mad Hatter as the "Java desktop system" (its actually just another linux distro.)

beleaguered

[Frymaster]

this feels like apple circa july 1998. mcnealy should take a page from job's book on how to pull yr company back from the brink:

• if ms offers you money, take it!
• advertise! not to try and convert new customers, but to your existing core market. "think different" was all about consolidation.
• fire some high-level people. just enough to get into time magazine.
• come up with something new and interesting - even if it's just packaging. hint: thin clients aren't interesting.
• foster a sense of elitism and cool amongst yr customer base. good lord, high school kid's have computers with the dell log on the front. this should be easy.

One or the Other, not Both!

[Bruce Perens]

One of Sun's mistakes seems to have been making an enemy of both Microsoft and Linux. You can do one or the other, but both just doesn't make sense.

But I'm afraid they'll make up with Microsoft and not us.

Much as they have exhibited a multiple-personality disorder where we are concerned, I'll not forget the good they've done us.

Bruce

Re:One or the Other, not Both!

[Zeinfeld]

Mirosoft is the enemy. Microsoft has always been the enemy. Hell, Sun was founded with Microsoft as the the enemy. The concept goes right to their core.

Pretty wierd attitude if true, when Sun was founded Microsoft was a little itty bitty software house that made most of its money from selling applications software for the Mac. The MSDOS business was about as important as the BIOS industry is today - cash cow with little growth.

The hardware industry has always been subject to the iron law that there is no high end. To find out why read 'the innovator's dilema'. It is much easier to move upmarket than downmarket. Dell know how to build large numbers of machines with tiny margins. It is not a huge step to move from there to building large machines with lots of processors.

The talk about high bandwidth, R&D etc is pretty specious. If Dell wanted to get into the real high end they could buy the same knowledge and expertise for a pitance from SGI which trod the same path Sun is now on five to ten years earlier.

Before very long Sun won't be in the workstation and low cost server market at all. They will continue to make big iron for a while but they will always be under attack from PC makers moving upmarket.

The basic problem that Sun faces is that Intel's annual R&D budget is larger than Sun's market cap. Intel will always have access to a better fab process, better design technology, more people.

Sun's original breakthrough came because it moved to RISC at exactly the right time. At the time CPU designs were usually created by small teams of four or five lead designers and a small number of assistants. The big advantage of RISC was that you optimized the CPU design to the compiler rather than the assembly coder. RISC designs started without any legacy to support, that meant that you could complete your design faster and get to market with a cuting edge fab process a year before CISC rivals.

That advantage is long gone. At this point there is no real difference between designing the next generation SPARC and designing the next generation Pentium. Both are now decades old architectures with mountains of legacy code to support.

Even Intel finds it difficult to keep up with the development of the Pentium. Their problems with Merced are largely due to the fact that the Pentium team have a big enough resouce advantage to overcome their legacy architectural constraints.

Sun is simply playing a poker game that is too rich for its purse.

I personally don't trust Merrill Lynch

[jsse]

but I do agree SUN is doomed.

I've been talking to a senior financial trader early this year, he said SUN's stock price is sky-rocketed to a point that they have to produce at $0 cost and sells for ten years to make up for the hyped value. Which is, of course, almost impossible.

Until recently I do believe SUN has already stuck one foot into its doom. As I speak we've already ruled out Solaris in several enterprise projects in favour of Linux. The cost of ownership is one factor, and the full-range maintenance supports from IBM, HP and Oracle is indeed a killer.

It's true that(don't flame) Linux has much to catch up with Solaris in enterprise deployment, but the market demand for Linux will only cause Linux to catch up fast and thus SUN's products will soon lose their market competitiveness very soon.

SUN's required fix

[Corpus_Callosum]

Sun Micrososystem is a company that built it's success through UNIX eliteism. Much like Apple, Sun was a company that you were proud to do business with. They had some of the greatest minds in the industry working for them (Bill Joy, James Gosling, ...), they sold the coolest hardware which often was even the fastest hardware (but not neccessarily - it was mostly fast enough). They had great support, etc... It was a COOL company to work for, with, or be a customer of.

Today, they are the same company they were 6 years ago. With the same operating system, the same hardware, but without the cool people and in fact without much at all that is still cool. The fact that they haven't changed with the times is exactly the problem.

In order for Sun to fix itself, it needs:

• A super cool, fast and cheap workstation. We are talking a cheap 4-way (or 8-way) Opteron with a 3D display or something similar. It has to be the best bang-for-the-buck on the market with features and "cool factor" that no-one else has. McNeally should walk across the street from the Cupertino campus and ask Jobs how to make this happen.
• To re-build their reputation as the price/performance leader. This is what kept their financial engines running strong through the 90s and they need to do it again. Even if they have to sell at cost in order to build the economy of scale, they MUST do this and do it NOW. They should shift to AMD processors in a huge way until their multi-core ultrasparcs hit, they should do whatever is neccessary. Period.
• They need to kiss and make-up with IBM. IBM can make a good partner for Sun. But Sun has alienated IBM and now IBM sees them as a pesky competitor instead of a competitive partner as Sun needs them to.
• They need a new center of gravity. Java was a perfect center-of-gravity for a long time. But Java is boring now. Nobody cares anymore... Sun has hundreds, if not thousands, of beautiful research projects that are sexy and cool... These generally stay research, which is unfortunate. They need to go harvest a couple of these and revv up their PR engines..

The greatest mistake that Sun can make right now is to assume that they will "pull out" of their death-spiral by making Java Desktops and waiting for the next generation of ultra-sparcs to hit. That is exactly how they can guarantee their own death. To live, they must kill their own business and allow the new, innovate stuff that they have in their labs to rise like a pheonix from the ashes of what was killed.

Re:SUN's required fix

[4of12]

A super cool, fast and cheap workstation.

In some ways this would be getting back to Sun's roots.

Recall that prior to the late 1980's when they started to develop SPARC that they relied upon Motorola and its 68000 series processors.

UNIX companies originally thrived because the kernel (BSD, SysV) were easily available, easily portable to whatever was the fastest hardware.

Sun still has great hardware for the big SMP machines that need high data throughput, but its desktop and small server business has gotten eaten by Linux, which is ironic considering how much of UNIX progress has been due to the contributions of Sun.

But the Sun's predicament in finding a new business model is a difficult one. The forces of commoditisation from Linux/x86 are a sea change happening to them (SGI has already suffered a lot from the same forces.)

For the most common purposes that a desktop computer is used these days, a factor of 10 or 100 in CPU speed or many other performance measures doesn't matter. What I see most of the time are web browsers, email clients, word processors and presentation software running on machines that are rarely taxed by those tasks.

The standard workload of the computer needs to be expanded into an area that people find attractive and which requires the kind of special hardware performance and system integration that Sun could deliver for them to reclaim the desktop. That's harder to do now than 10 years ago, with the latest x86 chips so much closer to the best performaning chips than they were. Windows on x86 is Good Enough for most people on today's desktop.

I disagree about "Java is boring". A lot of highly useful and highly profitable lines of business are "boring". Java has already been through the fire of proving itself to be useful and not just some hyped-up vaporous bloatware. Sun should build on Java, in the embedded device market, Wi-Fi. And they should continue to champion useful standards, just like they did with NFS. Customers are likely to view Sun as a nicer player if it is a standards bearer that is generous about opening up. Then, customers will feel more secure that Sun isn't just out to wrap them up in some technology over which dictatorial control and executive fiat could wreak financial havoc. They should follow through completely with Java as a open international standard.

They definitely have problems

[LarsWestergren]

Some people think that Sun does have a future as a hardware manufacturer, but I think I will have to agree with the article, they can't win the fight against being squeezed out of the market by cheap Intel/AMD servers running Linux (or Windows..).

They really have to decide where they are going, and find a new way to earn money. I think Java is their best bet. I HOPE they will do something like IBM, and jump on the Linux bandwagon as the main platform for Java. Still, finding a steady and large revenue stream from that could be difficult. I suspect they get some from Websphere and the other one (forget what its called), and maybe some from selling courses in Java, but that can't be enough. If they started charging money for using Java I think they would discover that their customer loyalty would evaporate pretty quickly.

I suspect some people here on Slashdot will crow about the problems Sun is going through, but consider that Sun has actually been good for the Open Source world. If it wasn't for the fact that it is a cheap Java platform, Linux would not be as widespread as it is in the business world. Also, they gave us Open Office, and participates and even sponsors a number of Open Source projects. Ant, GNOME, Tomcat, GNUlpr, Open Office... Sure, most projects are Java related, but that is understandable and it is still more than most of the big companies have given us.

Well, if they die, it will be interesting to see what happens with Java. Perhaps they will Open Source it completely, if not out of the goodness of their hearts, then at least as a poison pill against Microsoft...

More slashdot wishful thinking

[Decaff]

See: 'Suns Changing Horizon'

http://news.com.com/2009-7339_3-5087245.html?tag =s t_rn

"But even in the face of this barrage, industry veterans say the company is hardly on the verge of collapse."

"Industry veterans say although Sun has warned of a hefty loss and analysts are calling for drastic changes, the company has viable plans for the future."

Re:Well, that's kind of the point?

[BenjyD]

No, the MHz is only relevant when you are comparing the same processor type. Otherwise it's completely meaningless. The only thing that matters is how quickly it can process instructions and at what price.

Re:Sun _not_ Cheaper than Dell anyway

[Moraelin]

You are comparing a 1U rack optimized server(Sun) to a desktop case(Dell). If takes a lot more engineering(and money) to make a powerful server in a 1U form factor.

The exact same 1 CPU Dell configuration as a rack mounted server (yes, the PE1750) ... $1,698

Still cheaper than Sun's crap, or? In fact, even cheaper than the desktop configuration.

If you had a reading comprehension above that of a 5 year old you might have been clued into the fact that they are comparing their servers to the Dell poweredge servers. Dell's 1750 server is cheaper than the Sun 60x, but the Sun65x is just several hundred off. I would bet that after corporate discounts the price diff would neg. and if Sun's servers perform better...). I can't stand Slashdot idiots making invalid comparisons.

Ah, a jolly good flame war. Count me in.

So lemme see. You can't even notice that the PE 1750 is even cheaper, and spew stuff like "If takes a lot more engineering(and money) to make a powerful server in a 1U form factor." Well, gee, Dell's price list says the exact opposite.

Or let's talk basic comprehension of numbers and economics. "is just several hundreds off". Well, guess what? The V60x is exactly $752 more expensive, or a whole 44.3% more expensive than the Dell. (752 * 100 / 1698, for the maths impaired.)

The v65x is even more expensive. It's $2,550 for the smallest config. So $852, or 50.2% more expensive than the Dell.

So you're advocating... what? Paying 50% extra for the _exact_ same machine, just to have Sun's logo on it? Lemming.

As for "if Sun's servers perform better...", that's a huge "if". I'd really like to see some benchmarks first. No, seriously. They're can use exactly the same CPU, motherboard and memory as any other Intel server manufacturer can use. So if you want me to believe that just a bit of marketing hocus pocus will make it run faster, you better show some numbers that prove that.