Sun Microsystems (SUNW) CEO Scott McNealy has a short but sweet interview with Businessweek outlining Sun’s new business strategy – sell hardware (and services) and give the software away for free.
If it wasn’t for the occasional communication from McNealy everyone would agree their company crossed the event horizon of the Intel/Microsoft black hole long ago.
One thing that struck me was that in many parts of the world, people still assign value to the hardware while viewing the software as something that should be free. This includes most of China and the developing world. I would expect this business model to be well respected in China provided that the hardware isn’t outrageously expensive. Unfortunately, when you are supporting the cost structure of an in-house OS this is hard to avoid.
At the end of the day, Sun still needs to solve an important problem better than someone else and this interview doesn’t offer a credible example of what that problem is. McNealy highlights Google as a model customer, but last we checked they used x86 servers so cheap they were disposable when they broke. Let’s just hope that Mr. McNealy hasn’t forgotten that the hardware wars are over, x86 won, and everyone else lost. Steve Jobs was the last to figure out you can’t compete with Intel’s capitalized infrastructure, particularly when there is no value add doing so. It’s unclear why Sun continues to develop CPUs while simultaneously designing in AMD Opterons in some systems.
There might be an opportunity for hardware optimized with proprietary offload ASICs and supporting it in their own OS only. Locking down both the hardware and software side of important new applications is the best defense against commoditization. Apple has executed this strategy flawlessly in the consumer market. Could Sun do it in the enterprise market? They’ll need to find the application first. Maybe McNealy should start wearing black turtlenecks.
Originally seen at Slashdot, where it is accumulating an ever growing list of comments and comedy.
UPDATE – 9AM Monday December 5 -Just read in the WSJ this morning Sun is making a big chip announcement Tuesday. Looks like McNealy won’t drop the CPU jihad.
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