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Sun CEO On Razors And Blades
Kadin2048 writes "In an interview with BusinessWeek online, Sun Microsystems CEO Scott McNealy sheds some light on the company's new business model and future direction. In particular, he said that Sun's recent open source moves were part of a new strategy, where 'The software is the razor. The razor blades are the servers.' The move was called a huge risk by BusinessWeek, and it would put Sun at odds with the more traditional Microsoft-esque model with high per-seat or per-server software licensing costs and use commodity PCs and servers, which may not go over well with investors. But after having seen its stock slide and users flee for Linux and Windows, they arguably have little to lose. Perhaps the most interesting development to Slashdot readers is that in an effort to draw new developers to the platform, Sun is offering a deal that seems torn from a cell-phone company playbook: offering a "free" Ultra 20 Opteron workstation if you sign up for a $29.95/mo, 3-year service contract."
Actually its $30 a month (== $360 per year). Still a good deal.
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This is definetly what apple does in the consumer space. The cost of selling additional copies of software is zerom but hardware costs a certain minimum amount. If anything makes sense as a loss leader it is software that won't lose you more money the more you sell. Then of course your value proposition becomes hardware quality. Your hardware is better, it costs more (higher margin). So far this is working for apple.
Sig removed because it was obnoxious
It would seem you buy the hardware first @ $360.00 then the rest is all gravy (software and such) @ $720.00. Retail, the system is probably about 800.00. Still not a bad deal.
God: When you do things right, people won't be sure you've done anything at all.
It's absolutely indecent, calling something a Sun Ultra 20 that doesn't even have an UltraSparc processor in it. I am tempted to erect a catapult across the road from Sun headquarters and hurl Ultra 5 workstations at them.
Sun truly is 'going the Carly way' it seems. Stripmining their credibility to 'preserve stock value' for a bit longer.
resigned
This goes further into the model proposed by the post: 8-cores in the CPU (one FPU for the eight) and 32 discrete threads, all in a 2U server box. This is based on UltraSparc, but there's Solaris 10, and the port of gcc to it for seductive app transfer. The whole idea is a hardware play.
It makes me wonder why there must always be this gulf between hardware and software vendors. The most successful models meld them together handsomely into devices like iPods, mobile/pda devices, etc. This thick-thin shift is so insane. At the end of the day, we just want to do work, entertainment, and something useful with the devices we buy, and the location of what's going on is increasingly irrelevant. But perhpas this is what (F)OSS software will get for us, an army of coders coupled to an army of blade vendors, with dumb devices at the edge.
---- Teach Peace. It's Cheaper Than War.
This deal looks neat.
But Sun has a whole line of Opteron-based computers.
Does anyone have anything good/bad to say about their entry model, the X2100?
Here's the review I saw: http://anandtech.com/systems/showdoc.aspx?i=2530
I like the idea that it is an off-the shelf minimal server.
http://www.thebricktestament.com/the_law/when_to_
3 years is $1,078.20.
That is for the basic model. For something with real specs, 2GB ram, faster processor, and a Dual layer DVD burner, you have to pay a $1,800 premium.
For that money you can buy a Dual core 2.3 GHz Power G5 and have change left.
Your real profit here: The Apple looks a lot better, and is still cheaper.
For the sad design of this Sun box, they should charge Dell prices, this since they are competing with Dell with the Fire server line anyway.
My wife's sketchblog Blob[p]: Gastrono-me
Err, you don't seem to get the concept of the razor and razorblades model.
:p
Razor == cheap, Blades == expensive.
Or, in Sun-speak:
Software == cheap, Servers == expensive.
Which pretty much correlates with what Sun have been doing recently.
Amusingly, Sun also sell blades, of the server type
The cost is $1080 dollars, since it is ~30/month minimum of 3 years.
Second, an Ultra 20 Opteron does not mean 20 Opterons, it means a workstation model 20 with one processor.
So, while reasonable, not nearly incredible.
XML is like violence. If it doesn't solve the problem, use more.
The software is the razor. The razor blades are the servers. Together they're slicing up Sun's stock price.
Drag n' Drop DVD Recommendations
Oh, come on, we can see right through that. It's just another sleazy attempt by Sun to acquire money in exchange for goods and services.
The nerve.
xkcd.com - a webcomic of mathematics, love, and language.
Let people bitch about how you can build your own for a cheaper price. The Ultra 20 is still the better deal as far as I'm concerned.
* 3 year warranty on both hardware AND software (for which you have to pay extra with just about all other vendors)
* One of the most mature operating systems out there
* One of the most mature 64-bit operating systems out there (TRUE 64 bit)
* The only commercial system that is certified to run the three (arguably) most popular operating systems - Windows, Solaris, and Red Hat
Considering all of those factors, I still consider the Ultra 20 to be a hell of a bargain.
The only catch is that is it NOT $29.95 per month. You pay in three annual installments. I posted an open letter to Sun on a web site that I write for criticizing them for continually advertising $29.95 a month when they actually do not offer such financing. Jonathan Schwartz actually responded to it on his blog stating that financing and legal are the slowest segments of any corporation to respond to new ideas and that the Ultra 20's marketing was rushed. Just an FYI on that.
Still, I'd have that Ultra 20 replace my Sun Blade 100 at home in an instant if I had the finances at the moment.
The Overrated mod is for reversing inappropriate, positive mods, not for voicing disagreement with a post.
Some people pay more for _just_ a service contract.
Without any hardware whatsoever.
HI O WISE PRINCE. WHT TOOK U SO DAM LONG?
Ok, ok, let me get this straight: The server is the computer, and the server is the razor blade that is on the razor, which is the software. So, the computer, which is the server, which is the razor blade, runs the software, which is the razor. I'm confused. Either Sun is trying to shave using the handle as the blade and the blade as a handle, or I missed something...
Before you die, you see DoubleRing...
Considering that I've been working with Sun hardware for over 10 years, yes, I am fully aware of that.
Am I supposed to care? In fact, is anyone supposed to care? If you want the UltraSPARC line, Sun still has high-end workstations to take care of that as well as ALL of their mid-range and high-end servers. They're all UltraSPARC driven. I love this system for numerous reasons, not the least of which is that the Ultra 20 supports my two favorite underdogs - Sun and AMD.
The hypocrisy on Slashdot is amazing. We all scream and cheer with "It's about time" at the announcement that Dell might sell AMD hardware. But with Sun, suddenly the attitude is "{nose in air} Well! It's NOT an UltraSPARC! Hrmph! Peasantry!"
The Overrated mod is for reversing inappropriate, positive mods, not for voicing disagreement with a post.
I don't think that Sun's recent Open Source moves are going to help either. What is the problem that they want to solve? until that statement doesn't involve the words "selling large servers" Sun will continue to spiral into oblivion.
Open sourcing their software portfolio generates a large base of developers that contribute to the quality of the products and maybe they will even reccomend Sun hardware to their CIO. It is really no different than OpenOffice.org. Basically you get a huge amount of goodwill assosiated with your brand. Then you can sell hardware and support. The big customers will not consider buying the software without the support contracts. This model has proven to work for companies like Redhat, Mysql, Suse and others as well.
No Sigs!
"razor and blade" would qualify as an overused analogy for marketing, though it kind of fits, because the software is free or cheap and the hardware is sadly exorbitantly priced.
Considering what I've spent on service contracts over the last several years, that's not a bad deal. The box only has to flake once, and it's probably paid for itself. This presumes, of course, that your downtime is worth something. I bought desktops from IBM and HP for the last job because we got a three-year service contract with them, and paid slightly more (total) for hardware only for PIV/Xeon-based machines.
The best part of a three-year contract is that the company is betting that it won't see that box again during that period, so you have some hope that it's built to a reasonable quality standard. There's nothing worse (computer-wise) than getting a supposedly great price on a piece of equipment, just to watch it act flaky (eating into your productivity) for months before ultimately dying decisively (eating even further).
I wish them the best of luck. They have good tools, and maybe they can make enough off support and hardware to keep going. I personally think they should charge some minimal amount for the bundle, as Apple does, just for psychological reasons, but if they've thought this through, then let's see how it works.
the more accurate the calculations became, the more the concepts tended to vanish into thin air. R. S. Mulliken
But perhpas this is what (F)OSS software will get for us, an army of coders coupled to an army of blade vendors, with dumb devices at the edge.
I disagree with the "dumb devices" bit; that's too cynical. We can have devices at the edge that are only as smart as they need to be. This enables tons of networked apps that can relay dynamic information: news, airline flight status, and so forth. Increasingly, these tools are built into clients that aren't even web browsers (e.g. RSS readers, OS X dashboard widgets, cellphones, etc.). These networked apps make devices at the edge smarter (=== more useful), often in ways that a smarter (== more powerful) device couldn't possibly emulate.
Put another way, I could have a Cray in my basement -- but that still wouldn't help me conveniently find out when my friend's flight's arriving. The army of coders and blade vendors are still necessary to enable that application, despite a Really Smart Device providing heat for my house... ^_^
What is the styptic pencil, then?
Maybe the correct phrase is a hegenomy of devices, as this is what we have.
To extend your checking flights metaphor, I can do this on my mobile, my PDA, my notebook, or a terminal somewhere I don't own (not that I would). Each device is running something different. The mobile runs Symbian; the PDA runs WinCE, the notebook runs MacOS, and only heaven knows what the public terminal has, probably a Windows session.
At the core on the thick side is (statistically, anyway) either Apache/Tomcat, or IIS/something running the back end. Maybe Solaris, HP/UX, or something else is behind the curtain. Sun is trying to sell what's behind the curtain without thinking about the rest of the capability of the delivery system or the end device. Indeed the end device should go away or become something very uniform and manageable by their last perceived closed app, Java.
Yuck. I don't think that behind the curtain model works. Yes, hulking fast servers are good things. But divorcing what's at the edge is really very silly, unless you're a hardware server maker like Sun--- who provides none of those edge devices-- so in their minds they must not exist. These devices aren't embraced, they're ignored. It's egalitarianism through ignorance and hubris.
This is the same thick model they've been bandying about since inception, and failing-- except during the dot-bomb era when people just bought hardware for mindless reasons and irrational exuberance. As Robert Plant might sing, the song remains the same.... just a new stanza.
Sun is otherwise pretty smart, and smarter than Red Hat and SuSE when it comes to Unix. But they're also stuck in their own mud. McNealy and Schwartz should exit, and get a team that can appeal to a new and differently incented group of buyers. But their egos get in the way. They always do.
---- Teach Peace. It's Cheaper Than War.
They're giving away the servers *and* the software. I guess it's the service contract that's the razor.
Given Sun's business acumen the last decade, I expect them to start giving that away too. Not that I'd be happy about that. Competition is good, so competitors shooting themselves in the foot is bad.
It's rare that you're presented with a knob whose only two positions are Make History and Flee Your Glorious Destiny.
Back in the 19th century, all men shaved with straight razors. Then in 1905 King Gilette patented a disposable-blade razor. It was called a "safety razor" purely for marketting reasons. Its main selling point was that you never had to sharpen the blade — when it got dull you just threw it out and bought a new one.
And yes, they did sell the handles at a loss, and made it back selling the blades But that was just to ease market resistance. The product stood on its own merits.
It's an interesting strategy, it doesn't apply in 90% of the business models it's claimed for. I certainly don't see how it applies to computers. Everybody know about Total Cost of Ownership, and aren't going to be impressed that they can get a Sun box for free. If Sun is going to make all its money off of software and customer service, then they should stop making computers altogether, and leave the hardware headaches to others.
Here are some of the cellphone-like terms from that contract:
- Service plan includes up to 1 Trillion CPU instructions per month, absolutely free.
- Extra CPU instructions are billed at $0.08/Billion peak, $0.03/Billion nights and weekends.
- Free instructions do not include floating-point operations. All floating point instructions are billed at $0.11/Billion.
- Monthly bill will also include a regulatory cost recovery service fee. You agree to pay this fee each month. This fee is not a tax, and it is not a required government payment. It is not possible for you to know the cost of this fee until you receive your bill. The amount of this fee is determined totally at the provider's discretion, it may change from month to month, and you agree that there is no limit how high the fee may be set. You agree that the provider is not required to justify the fee or base its amount on any reason whatsoever.
- If you cancel the contract before the 3-year term is up, you will be responsible for an early termination fee of $75,000 per system per month of contract remaining, up to a maximum of $3,200,000.
- The system remains the property of the provider. At the end of the contract term, you must return it in like-new condition, and you will be responsible for a $2895 restocking fee, plus, at our sole discretion, refurbishing fees for any wear, tear or damage to the system.
- This system is not compatible with household A/C electrical power. This system requires 3-phase, 153 Hz, 67 Volt RMS power. You are responsible for using a compatible power source. Failure to connect appropriate power will destroy the system, and will result in damage fees of at least $17,000. You may purchase optional compatible power from us. Our current rates are $34.50/kWH plus $179/month power connection fee.
- We may change any term of this contract at any time without notice. You agree that any and all changes are binding on you and you heirs.
Message to Sun, if you want more IT people on your hardware and software, you need to make it easier for people to gain those skills (you have just made it easier to gain the hardware). Books only go so far, you have to play with it, learn it and use it to know it. I'm interested in learning Sun, but no *nix shop is going to let me in the door no matter how many years of IT experience I have with just a book education. People want education, so make it easier for the lay person to afford it, ok?
The best advocate for your product is the IT person. The best way to get the advocate is to make sure that the IT person can learn you product. I've been looking for a reasonably affordable option to get trained on Sun for years, most IT people can't talk their contract house into paying for your clases. Novell, Microsoft and Novell all have readily available classes in community colleges and the like, Sun, where are you?
Make sure you check the expiration date on your card before you order!
-Patrick
"They never stop thinking about new ways to harm our country and our people, and neither do we."
Okay, whoever modded the parent down is clueless. Sun can indeed customize their systems to anything you want. I work for a VAR. I know these things. In fact, it's my job to know these things. Yes, you are only given a certain number of configurations on the main web site, but that's called SIMPLICITY. They offer what they consider to be the most basic configurations that would appease a major market and they make those available. If that's not what you want, you are always free to contact their sales department or a VAR.
/.
And I agree that if you're too lazy to pick up a telephone and actually **gasp** TALK to someone, you obviously don't really have an interest in the system and just want to complain.
Call a spade a spade and you get modded down. Unbelievable. Only on
Troll. You're a complete troll, and you're not very good at it, I might add.
You cannot compare new items to grey/aftermarket for many reasons, not the least of which is because of warranty. There is not one liquidator or after-market reseller that will offer anything like a 3 year warranty on parts and software for an item which obviously is not theirs. (I'm quite sure that no aftermarket reseller is owned by Sun.) To put those units under a three-year warranty with Sun, it might have to be recertified, which is not free, depending on your local sales rep's time of the month (that's a joke, folks), and it will definitely cost more to put that system under a maintenance contract for three years. So, yes, you can buy it cheaper, but putting it under maintenance contract is much more expensive than just buying an Ultra 20 outright. You clearly do not work with Sun hardware in a corporate environment on a regular basis or you'd know this.
Since the warranty is the major selling point of the Ultra 20, your attempt to downplay the Ultra 20 has no merit.
Back to troll school with you! Go! Bad troll! BAD!!
The Overrated mod is for reversing inappropriate, positive mods, not for voicing disagreement with a post.
-- "Most people prefer a popular myth to an unpopular truth"
At least in the telecom world there is a lot of that "behind the curtain" sneakiness that needs a lot of horsepower to make the stuff customers see work.
Just as an FYI, the digital world isn't all web servers talking to clients.
On the back-end B2B side there are seems to be more and more XML+HTTPS over private network links between a service provider (any service, think PayPal + X service for instance) and any number of external vendors. External vendors are doing anything from billing, to content delivery, to simply providing user tracking (evil, I know). The user tracking stuff is particularly intensive if you are doing network level tracking (X users going to Y IP that resolves to Z domain) that's a lot of packets to parse :)
Kisanth
Look, yes, SPARC hardware kicks the crap out of commodity x86, sure. But it's not, as I understand it, nearly that far ahead of IBM POWER hardware. The biggest problem with POWER was that you had to use AIX or Linux, both with definite deficiencies relative to Solaris.
But now there's OpenSolaris, and OpenSolaris is being ported to IBM RISC hardware at no cost to IBM. IBM will then be able to pick it up, polish it, offer support contracts, and provide you with a complete Solaris-on-quality-RISC solution, without a dime going to Sun.
I'm not saying it will happen, but it's certainly a reasonable possibility, something Sun should have a plan for in its business case. If IBM starts offering Solaris-on-RISC, how is Sun going to avoid losing market share -- and thus resources for further development -- to IBM? What's its differentiator?
In short, does Sun actually have a plan? Or is it in "We must do something; this is something; therefore we must do it!" mode?
The x86 servers they are selling are price competitive with the dells and Hp's and can run solaris which has commerical unix software that linux still lacks. A stable api and abi would be nice so unix vendors can port to linux. You can run windows or linux on them as well if you wish.
I agree with SGI. SGI's performed poorly and were just generic pc's with ok graphics cards and were expensive. Sun's offerings are not bad and solaris is really nice for those who need uptime. If sun can pull it off then great. It seems they are trying to reinvent themselves rather than acting desperate.
Lets hope I am right. The sun systems look more like open x86 unix systems then anything and you can buy one for as low as $799. Very much unlike the Sun I used to remember.
http://saveie6.com/
Well, Sun's Open Source credibility is increasing. Now that they've decided to open source everything, it will only improve more.
Only if they refrain from further schzoid episodes. This week they like Open Source and are ready to compete with products rather than lawyers. Next week, they could be threatening the Harmony project and making subtle patent threats. You never really know where you will stand with Sun next month, next year, or even tomorrow.
If they hold their present course and keep their mouths and their lawyers in check then we may see the improvement you speak of.