Network computing still at the heart of Sun

10 Dec 2003

Berlin was the venue for Sun Microsystems customer, analyst and media conference, SunNetwork- the first time the event has been held outside of California. Considering the technology giant’s current financial situation it made sense that it should embrace the EMEA market which accounts for one third of its annual revenues.

The US press may be writing Sun’s obituaries after a year of profit warnings and a total reorganisation of its product lines and pricing strategies, but European customers obviously consider the company has a lot of relevance. The 6,500 places at the conference were sold out almost a week in advance and hotel bedrooms were in a premium in Berlin for the two nights of the event.

Sun CEO Scott McNealy (pictured) was almost belligerent when pushed on Sun’s financial situation – it lost US$2.378bn in its last financial year and has already issued a profit warning this year. He attributed the problems to Sun’s two key markets: telecommunications which is in the doldrums and financial services which is consolidating with a resulting cut in capital expenditure.

The mantra from Sun executives these days is that they are attempting to drive the cost and the complexity out of enterprises’ IT infrastructure. One of the main planks of this network computer strategy is to release new or updated hardware or software four times a year to reduce implementation headaches for IT managers, with the eventual goal of having all Sun software integrated into a single platform, updated quarterly.

At Berlin that meant NC03Q4 (that’s Network Computer 2003 quarter 4 for the acronym-challenged) was a series of small advances rather than any big bangs. Those waiting for further information on the new partnership with chip maker AMD were disappointed, as there was little new in that department. There had been speculation that there would be a date set for Sun to release systems based on the AMD Opteron processor but all we got was the fact that Sun will release single-processor up to eight-processor systems and build its Opteron range out from there. Early next year was the only time frame given although Sun customers can see pre-production models now.

In fact Sun’s server strategy is getting increasingly hard to follow for observers not paying close attention. It has systems based on Intel’s 32-bit Xeon processors but won’t be using its 64-bit Itanium which McNealy called “I-tanic”. At Berlin Sun announced blade servers running the 32-bit Athlon and will use Opteron for its 64-bit x86 platform. Meanwhile it remains committed to its own SPARC microprocessor architecture and introduced two new Netra servers for the telco sector based on SPARC.

Mercurial Sun founder and figurehead Scott McNealy was as usual fantastic value for money. In his keynote speech he bashed all his favourite targets with Microsoft as always top of the list. He wondered aloud why there was no Java viruses even though it’s deployed on millions of computers around the world and made his customary reference to Microsoft being a fine virus delivery platform.

He gently prodded at enterprise players such as HP and Dell that have ramped up their consumer divisions as a response to the lull in corporate IT spending. “We solve complex network computer problems, we don’t do cameras, printers or silicon,” he deadpanned. He also said a Dell server is no more a web services solution than a piston ring is transportation – McNealy has been using lots of car analogies this year as he evanglises Sun’s ability to provide a complete hardware and software stack to solve complex IT problems.

At every available opportunity he repeated the phrase “cheaper than Dell” and Sun is clearly hoping to see off any challenge from the direct seller in the server space with its systems based on the Intel x86 architecture.

McNealy claimed the new pricing structure for Java, at US$100 per user per year, is a revolution in the IT sector. Cynics might suggest that it is the action of a company in crisis that is desperately trying to grow its revenues again. The Sun CEO counters such suggestions by pointing to Sun’s massive cash reserves – it has US$5.5bn in cash on its balance sheet.

He also believes that Sun can innovate its way out of its current malaise – it has maintained its R&D investment at US$2bn per annum pre-, during and post- the dotcom bubble that was so good to the company. “If I had a crystal ball, there’s a whole bunch of leases I wouldn’t have signed and people I wouldn’t have hired,” said McNealy.

It doesn’t take a crystal ball to tell that there are tough times ahead for Sun. The massive interest from European customers shows that the company is still a hugely relevant player for the corporate sector but whether its vision of the network computer becomes the pervasive model of computing has yet to be decided.

By John Collins