Sun’s strategy laid out for all to see!
In a remarkably frank interview Jonathan Schwartz, president and chief operating officer, and Scott McNealy, chairman and chief executive explained their strategy to ZDNet UK. As I read the interview Jonathan’s blog entries started to take on a greater coherence. I have extracted the guts of the interview here, and I have added links to a few relevant blog entries by Jonathan:
Step No. 1: Make the argument that Linux equals Red Hat. Linux has become a social force, with all of the free world supposedly cooperating to create an always improving operating system that is forever cheaper and more valuable than the old versions of Unix.
Sun’s view is that Linux is nothing more than Red Hat. The operating system is not about world peace and the charitable work of the world’s great programmers. It’s like every other operating system ever created: It’s about the foibles, greed, mistakes and engineering prowess (or lack thereof) of one vendor — in this case, Red Hat.
Step No. 2: Belittle Red Hat. By collapsing Linux into Red Hat, Sun now has a clear target. It can hammer away at a company, as opposed to waging the impossible task of fighting a social movement. And according to Sun, Red Hat is a very vulnerable target — a company with limited resources, engineering talent, world coverage and capabilities — with potentially serious intellectual-property issues.
When Sun visits billion-dollar companies, it uses an effective line of attack: “You’re going to entrust the future of your company to what vendor? A little software player with no proven abilities in the enterprise business? Are you out of your mind?”
Step No. 3: Contrast Sun with Red Hat. Sun has been a trusted, pragmatic partner with its customers for decades. It is going to return to those customers and clearly contrast its long-term relationship with newcomer Red Hat. The company is doing this now with its old Wall Street customers.
Step No. 4: Play up the OS-plus-platform advantage. Sun is playing a very old game here, but it will play it hard. The company is saying that you cannot be a legitimate, long-term player without controlling and harmonising the operating system and the platform. You must have control over both to offer easy and cost-effective solutions for your customer.
Hewlett-Packard is letting HP-UX die in favour of Red Hat and Windows; IBM is introducing Power systems that don’t run AIX; and Dell never had an operating system.
Sun makes the claim that it will be the only vendor with a strong platform — Sparc at the high end, x86 at the low end — that also has a strong operating system to offer with Solaris at the high and low ends.
Step No. 5: Disrupt the market with a new pricing model. Sun wants its server pricing to mirror mobile phone pricing. When you buy a cell phone, you do two things: One, buy the operating system and the phone together; and two, subscribe to mobile services for monthly fees.
Sun is pricing the server the same way — get the server for a very low price or potentially no price, and pay for the maintenance and applications (the value imparted) on a subscription basis. Sun believes that this new pricing model will only be possible for a vendor that sells and integrates the operating system and the platform. It can cross-subsidise between the two.
Step No. 6: Feature customer choice. Sun has dropped all of its stridency around Unix — it is offering choice at the high end and at the low end. It is offering not only Solaris but also Linux and Windows for the operating system. And it is finally offering x86 via the Opteron chip from Advanced Micro Devices.
Step No. 7: Feature engineering. Sun is playing an old game here, too: “My tech is better than yours.” It is saying that it will out-engineer not only at the operating-system level with Solaris but also on the hardware front. It is claiming that the new generation of Sparc will have vastly lower power consumption than Itanium and Power while featuring faster throughput and superior multithreading.
On the x86 front, Sun is saying that Opteron — AMD’s answer to Intel’s Itanium — is superior to what Intel has to offer and that, through its long-term engineering experience, it is going to produce x86 products superior to those of Dell, HP and IBM. Sun claims that engineering remains a distinctive competence of the company — a battleground where it can hammer the competition, especially the low- or no-R&D companies like Dell.
Step No. 8: Feature the Microsoft-Sun deal. The money flowing from Microsoft to Sun will help. But more importantly, watch for Microsoft and Sun to concoct some tough frontal attacks on IBM, their avowed common enemy.