Understanding the Sun Strategy

A sound business strategy is essential for revenue growth and the long term success of the company. I personally believe that helping people to understand Sun's business strategy is equally as vital. We fear what we don't understand and so its essential that we effectively communicate Sun strategy to retain the confidence of our customers, shareholders and even our employees.

A couple of weeks ago, I was on a training course and we had Jonathan Schwartz visit us for an hour (very nice of him to spare the time). At that session, he said:

"One of the most frequently asked questions is 'how do we make money from open source sofware?'"

He then went to a flipchart and drew a diagram like the one on the right...

Software represents the Sun software product suite.

Systems represents the Sun system hardware range (servers, storage & network)

Services represents the support and professional services offerings

Microelectronics represents our silicon business (microprocessors, etc.)

Notice the overlapping regions - these are the richer business areas where we provide solutions that integrate two or more of these four fundamental product spaces. The sweet spot being right in the middle! So how does this relate to open source software and translate into growth?

Well, software is the most common "adoption vector". Entrepreneurs typically want to prototype their new business ideas as cheaply as possible, so they turn to the rich and fertile pastures of open source software as a source of free software building blocks for their nascent business. If the prototype proves itself and a new startup is born, they're unlikely to throw away those building blocks - no, it is far more likely that the new startup will continue to evolve and grow from those early open source adoptions.

By providing an attractive, feature-rich and technologically advanced open source software product range, we significantly increase our chances of being the "adoption vector" for these new businesses...and when they bloom, we can help them grow with our systems, services or maybe even microelectronics thanks to the relationship we established with them in their early days. This partnering relationship is exactly what we want to foster - for the mutual benefit of our customers and Sun.

The crucial point is that this is not a short term strategy. While we are doing everything we can to accelerate the process, it will take some time to get the momentum we want. It's inevitable that the high end proprietary software market will eventually dry up because sooner or later, open source alternatives will dominate.

Comments:

First, your picture is completely wrong....wrt the size. The correct version is a very very big "system" pie with three tiny circles.

Second, it is not "strategy", it is in fact the "Organization chart" of Sun. Each division has its own revenue goal...they are all profit centers. So it won't work.

Posted by I doubt it on May 03, 2008 at 08:22 AM BST #

I wonder how this applies to the music industry?

I've heard Scott McNealy commenting about how the price of a product tends towards the cost of production and distribution. I suspect this is an aspect of Economics I'm not familiar with, a quick search around the Internet suggests this is the "Cost-of-production theory of value". Suffice to say that I see parallels.

Chatting with Jimmo in person we wondered what the other circles might contain. If there's no other value to be had, where's the point of an adoption vector?

I'm assuming the industry has done it's maths - and similarly the movie industry too :-)

See also:

http://timharford.com/2008/04/piracy%e2%80%99s-hidden-treasures/

Posted by Peter Harvey on May 06, 2008 at 03:34 AM BST #

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Jimmo has been at Sun since 1994 and is currently a director within the software organization. This blog is infrequently updated with his thoughts, ramblings and observations. Enjoy!

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