Sunday, November 20, 2005

How we got where we are

Let's start out with the Big Picture. Around the year 2000, something big happened. Just as the internet bubble was bursting, Google showed the world that you could run your business on a number of standard PC computers connected to the internet. Open Source projects like Linux, Apache, Sendmail and MySQL showed that you could get hold of high quality software for free. This was bad news for most people who sold big computers and expensive software. It was especially bad news for people who sold web servers. Sun collapsed from a peak of over $60 a share to today's $4 level.

Most companies were quick to adapt to this disruption, but Sun decided to "tough out" the storm. It didn't work. Sun gradually down-sized, but too slowly to "get underneath" its large cost overhang. Gradually Sun reduced its head count to 30,000 and this year recovered to break-even while maintaining a 2 billion R&D spend. Quite impressive, but profit is what counts right?

Has Sun reached a turning point? Can it deliver profit to shareholders? Well, the signs are good. Stay tuned for a detailed analysis of new Sun technologies and services, such as OpenSolaris, ZFS, Niagara (AKA T1 chip), Chip MultiThreading (CMT), grid/utility services, and most importantly storage.

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