Wednesday, December 21, 2005

Red Hat makes tons more profit than Sun

The Register's story Subscriber love drives Red Hat in Q3 details Red Hat's surging revenue and profit - respectively to $73m and $23m for the quarter. Red Hat's excellent execution of the Red Hat Network (Linux update/distribution service) and its related subscriptions have returned excellent numbers.

Now it's Sun's turn. Solaris really needs the ability to run Red Hat Enterprise Linux, and at a lower price than a Red Hat subscription. It sounds crazy, but it's both possible and legal. First, Solaris needs "BrandZ" containers which can host any compatible operating environment (e.g. Linux). Second, you need a free copy of Red Hat - and here's where CentOS comes in handy. From information at, it appears Sun is hosting CentOS via BrandZ containers.

To summarize, the ABC for competing with Red Hat is:
A: AMD Opteron server (this won't run on Sparc)
B: BrandZ containers in Solaris
C: CentOS, the free Red Hat Linux clone

...then the revenue (profit?) comes from the service contracts with Sun.

IBM - Sun's biggest threat

In 2006, Sun's biggest competition will come from IBM. For example today's CNET article IBM to acquire Micromuse for $865 million shows how IBM will compete against Sun's N1 Software for network service management. It might be time for Sun to give N1 a "shot in the arm" and potentially a rebrand since the N1 name is not hot.

Other IBM threats on the horizon include:

In these key areas of Throughput Computing, Office Software and Middleware, IBM has a strong pedigree. I believe that Sun can beat IBM by leveraging its much touted but under-utilized Sun Grid. Example applications for the Sun Grid:

  • Manage my servers (healthcheck, patch, load-balance, etc)
  • Host my office documents, so I don't need to
  • Provide a J2EE container environment for my business

2006 sure will be fun to watch!

Thursday, December 15, 2005

OpenOffice and StarOffice

ZDNet reports that Sun is going to give OpenOffice and StarOffice the ability to open and save documents over the internet. Jon is quoted as saying "OpenOffice is simply another network client. Being able to just save to the cloud, using WebDav, is the direction that we're heading. If it's not in there now, I can take you back to Sun and show it to you."

This is VERY GOOD NEWS and provides yet another perfect application for the Sun Grid. It also helps to build momentum behind OpenOffice and the Open Document Format (ODF). If Massachusetts makes a move to open formats, expect to see many other companies and agencies follow suit.

Tuesday, December 13, 2005

Today I installed Solaris 10 on my Sony Vaio Laptop. It reminded me of having a blood test. Not particularly painful, but unpleasant. I felt relief when it was over.

Why did I do this? Well, many sources tell me there are millions of downloaded copies of Solaris, but are they getting used? Did they morph from download to install, with a potential to become a support subscription? From my experience this "path to profit" could be easier. For example, I would have liked more options to change my installation choices, and a clearer explanation of what the installer was waiting for when things appeared to stall. To summarize: "good work but could do better".

On the upside, OpenSolaris is looking very tasty indeed, with its hugely important ZFS filesystem and BrandZ containers for RedHat Linux. The sooner this becomes production-ready, the sooner the Linux wave moves over to Solaris.

Thursday, December 08, 2005

An idea for a "Service Oriented Architecture" world

I was reading the Sun Grid overview and the thought struck me:

How come I can't use the Sun Grid as a regular web service?

What I mean is, if I can make Google searches via web services (SOAP) and check Amazon book prices (REST), then how come I can't use a computer program to do this:

  1. Sign in with a token
  2. Upload my data
  3. Upload a job to run
  4. Run the job
  5. Check the status until ready
  6. Download my results

Come on Sun - remember "the network is the computer" right?

Great execution

In my last post, I questioned Sun's execution of their grid service - since it's still impossible for anyone to sign up for an instant-access account via the web. But Scott and Jon's unveiling of the new T1000 and T2000 servers was literally spectacular.

I went to see Jon launch the "pizza boxes" at the Hilton Met in London. You couldn't help but come away with a deep feeling of satisfaction (as a shareholder), much akin to eating a perfectly cooked large rib-eye with a good bottle of red. This was definitely a "turn-around moment", and possibly one of Scott's iPod moments.

Here's what needs to happen now:

  1. Industry role models (e.g. eBay) need to give glowing case studies
  2. The "try and buy" offer needs to be simple and genuinely taken up
  3. The PR hype needs to be sustained, and amplified (e.g. Red Hat on Sparc?)

As other industry analysts have noted, if the "T-machines" can stabilize or even grow Sparc revenues, then the Galaxy X64 servers can drive big profit numbers. A FY2006 number of $500m or more is now a possibility. When the analysts improve their "hold", "neutral" and "underperform" opinions, expect to see SUNW climb to $5 and beyond very soon.

I just wish I had been able to buy more when they were cheaper - a nice problem to have.

Thursday, December 01, 2005

Free and Open Software (FOS)

Jon Schwartz has long been a fan of Free and Open Software (FOS) and yesterday announced that Sun will bundle Java Enterprise System and Developer Tools with Solaris, to make the Solaris Enterprise System.

This was poorly received by the markets, as Sun stock fell hard on the news. But today things are rebounding - so either it was a technical price movement, or the analysts are waking up to the fact that it really does make sense.

The challenge for Sun is to persuade business customers to subscribe to support services. If they don't, they will get high adoption with no/low revenue growth. This is where Red Hat excels. Red Hat only provide download access to Red Hat Enterprise Linux (RHEL) via paid subscription per server. How will Sun's "per employee" model compete with this?