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Competitors will portray Sun’s moves as desperate. I don’t think Sun would deny that. Was there ever a better time for a technology company to pull out all the stops? If IBM, Hewlett-Packard, or Microsoft chuckle at Sun’s mad R&D scramble, customers should ask Sun’s competitors why they’re not doing the same thing.
Sun understands that for at least the next year, companies are going to be making basic decisions about how to spend limited IT budgets. There are some market forces Sun can count on — server and manpower consolidation come to mind — so no waffling is necessary on offerings such as blades and N1, which target those areas. Beyond that, it’s anybody’s guess what IT will deem important. The lesson Sun learned from IBM is to bet huge on your favorite horses and bet a little on each of the rest. True, some horses are darker than others. The odds on Solaris x86 making it to the first turn must be 200-to-1. The potential payoff makes the bet worth putting down, but Sun must be willing — and I believe it is — to let customers kill off this and other Sun technologies that don’t meet their needs.
Sun CEO Scott McNealy has committed to spending $500 million per quarter on R&D. That’s pulling meaningless — read, “conveniently round” — numbers out of thin air, like the $6 billion Sun claimed to spend in 2002 giving StarOffice to people who can’t afford computers. Still, I admire a public company that ups its R&D burn rate in the face of declining share prices. Stockholders would reward Sun for decimating its workforce and selling off some of its prized assets. But Sun knows its customers are selfishly focused on what Sun can do for them, even if it means Sun might go out of business trying to deliver it. If it doesn’t try, Sun certainly will not be able to compete against entrenched commodity suppliers such as Dell and Intel nor against go-for-broke competitors such as IBM and Microsoft.
The company that always worked so hard to educate — read, “pressure and lock in” — its customers is now willing to listen. To Sun’s credit, it understands that in this context — trying to reach the top tier of IT buyers in a down economy — listening is a costly and interactive exercise. Most customers can’t sketch out exactly what they want from Sun. A customer will know the right solution only when he or she sees it, so the massive spending is Sun’s way of restocking its showroom.
