Business Analysis of Sun Microsystem

Business Analysis of Sun Microsystem

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Sun is the only major company that builds an entire line of computers based exclusively on its own designs, its own chips, dubbed Sparc, and its own software, a version of the Unix operating system known as Solaris. As such, Sun stands alone as the "pure" alternative to the Wintel world-a moniker used to describe computers powered by Microsoft's software and Intel Corp.'s microprocessors. This strategy had been roundly criticized. Conventional wisdom suggested Sun's Unix market would be decimated by the software and chips of the Wintel alliance. That hasn't happened. Instead, Sun's exclusive focus on Unix has helped it gain market share. Sun has risen to third place among Silicon Valley companies, behind Hewlett-Packard Co. and Intel with nearly10 billion in annual revenues. It is competing on an equal footing with larger rivals HP, IBM and Compaq Computer Corp. on sales of high-powered computer systems to corporations. Sun edged out HP as the top seller of Unix servers for the first time in the most recent quarter, and that key portion of its business is growing at a faster rate than any of its competitors, according to market researcher Dataquest. Analysts sing Sun's praises. Merrill Lynch & Co. ranked Sun as the top computer maker in its latest "financial scorecard," a report that rates companies based on revenue per employee, revenue growth, operating margins and other financial data.

Sun has capped the year with a couple of major victories. It won a preliminary court ruling with Microsoft over Sun's Java programming language; and it signed a major alliance with America Online Inc. that solidifies Sun's position as the leading supplier of equipment and tech...

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...ure will address all the business requirements is not a sound strategy," says Susan Whitney, general manager of worldwide system sales for IBM.

But more and more analysts say Sun's focused investments have helped stretch its own product line to meet the needs of customers. "They are beginning to be viewed as much more credible as an end-to-end solution provider," says Joe Ferlazzo, an analyst at Technology Business Research. Sun makes life simple for software makers, offering the same Solaris operating system on everything from a $2,500 workstation with a single Sparc chip to a $1 million server with 64 parallel chips delivering as much computing power as an IBM mainframe, he said. "That's what's needed in the ISP environment and in corporate computing." So as you can see Sun is becoming a major competitor to Microsoft and it hold on the computer operating system.