Here is a report from ZDNet India that should gladden our hearts (except that they say
Linux, no Gnu)
V. Sasi Kumar
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Linux is giving Sun a burn
Charles Cooper, Special to ZDNet India,
February 17, 2003
When Sun Microsystems got started in 1982, companies such as Wang and Data General
dominated the hardware business. In less than a decade, this upstart Unix outfit was a
billion-dollar-plus phenom while the once-mighty minicomputer makers had been consigned to
irrelevance.
Such is the impact of what Harvard Business School professor Clayton Christensen calls a
disruptive technology. Sun, which won IT converts by offering minicomputer customers less
expensive and less proprietary systems, had come up with a technology-price recipe that
the incumbents could not match.
How times have changed nearly two decades later, with Sun now the one scrambling to remain
relevant. As the Unix server market continues to shrink, sales of Intel-based servers
running the Linux operating system nearly doubled in the fourth quarter of 2002 from a
year earlier.
For the record, Sun's brass is quick to dismiss this as a minor concern.
Sun is not standing still. The company has ambitious plans to build more speed and
functionality into Solaris while committing to using 32-bit Intel processors. In the
meantime, the company also is filling out its product portfolio for managing data centers
with a single, unified system under its recently announced NI initiative.
"Am I worried about Linux?" says Jonathan Schwartz, the savvy executive who runs
Sun's software group. "No. Am I worried about Intel? A little."
Maybe he should take another look
Rivals are selling gobs of Intel-based hardware running the Linux operating system. The
pitch is that Linux on Intel is a less expensive and more open alternative to anything in
the Sun technology arsenal. Even though Linux does not yet feature any special
technological advantage over Sun's Solaris operating system, it is the fruit of
open-source collaboration and thus does not belong to any single company.
Sun argues all this is misleading advertising because of the hidden costs of ownership
associated with building sophisticated data centers. When pricing Linux systems, customers
can't ignore the cost of additional software they must buy to run on top of Linux. Sun
also points out that it throws much of that into the package that comes with its Solaris
operating system.
Another Sun argument: What's written to Red Hat's Linux won't run on Linux
distributions from SuSe, Monte Vista, and the rest of the pack.
Fair enough. Though I contend that it's still easier to port from one Intel Linux to
another than it is to port from one Solaris to another. Given the sharp year-to-year
growth of Linux sales in the December quarter, more than a few data center administrators
apparently agree. Consider the following, for the December quarter:
* IBM raked in $159.9 million in Linux-related sales, up from $75.6 million a year
ago.
* Hewlett-Packard's share rose to $80.2 million, up 81 percent, from $44.3 million
a year ago.
* Dell Computer's Linux server revenue soared nearly 66 percent, compared with a
year ago, to $77.1 million.
* Sun, which started selling Linux servers in 2002, finished with just $1.3 million in
Linux revenue.
When measured against total IT expenditures on corporate data centers, those numbers are
still relative drops in the bucket. But the Linux-on-Intel combination also allows
Sun's rivals to beat it over the head on price.
For IBM, a commodity operating system like Linux is a godsend because it can afford to
subsidize its commodity strategy with revenue from its software and services businesses.
Similarly, HP can count on its profitable printer business to offset the loss of margin
elsewhere. (It also has a hardware line in the works that will run Linux top to bottom,
unlike Sun. Linux is on Sparc if you want to do it yourself, but it's not popular.)
And there's no company around that has been able to figure how to beat Dell at selling
lower-end systems.
Struggling to revive its moribund stock price (still just above $3 a share), the last
thing Sun needs or wants right now is an even worse price war.
With prices on Linux-Intel systems falling, the pressure is on a "higher value"
company like Sun to justify the higher prices it charges for systems comprising
proprietary Unix operating systems on RISC processors. Corporate data managers are
especially anxious about reducing hardware costs. What's more, they know the migration
to Linux from an existing proprietary Unix platform reuses a lot of the existing code and
skills.
Sun's retort is that data centers don't throw away existing architectures. That
answer is eerily reminiscent of what the minicomputer crowd said back in the early
1980s--just before Sun turned them into also-rans.
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