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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.
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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.
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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.
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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.
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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.
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The software is the razor. The razor blades are the servers. Together they're slicing up Sun's stock price.
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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.
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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?
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!
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.
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-Patrick
"They never stop thinking about new ways to harm our country and our people, and neither do we."
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?