May 18th, 2006
Sun's commitment to R&D, developers is too easily dismissed
Between the keynote "inquisition" of Sun’s newly installed CEO Jonathan Schwartz at Gartner Symposium and the press conference that followed, I had a lot to think about on the flight home from San Francisco yesterday. To be fair, the Gartner analysts (Paul McGuckin and Darryl Plummer) who put Schwartz on the hotseat had every right to ask the new chief executive how he plans to put the company on a profitable track. After all, IT executives who are looking out for their own futures as well as those of their companies rightfully prefer to work with stable and solvent IT suppliers. Sun could very easily pare back its R&D and interest in developers and become more of a commodities player like a Dell or an HP. But to spend nearly 60 minutes of a 60 minute interview rephrasing the same profitability question over and over and over again in hopes of tripping the always on-message Schwartz up was not only embarrassing, it was disrespectful. Not of Schwartz, but of the IT buyers who come to Gartner in order to figure out their next move.
If we want to see Schwartz get pan-fried to Paul Prudhomme-blackened perfection, then we can tune-in to one of Sun’s quarterly results conference calls. Wall Street analysts love to punish Sun. But, at an IT event for IT strategists, it would have been better if McGuckin and Plummer spent just a bit of time on the financial stuff and the rest on picking Schwartz’s brains for the sort of details that are relevant to enterprise IT strategies. After all, when you’ve got an executive on stage that oversees a $2 billion per year hardcore IT R&D budget in front of a hardcore IT audience, then might be a good time to ask that executive to walk through the Top 10 highlights of that budget and why those highlights might be relevant to the way an IT strategist should be thinking. Would that be setting Schwartz up for a bit of shameless promotion? Sure. Are IT buyers saavy enough to mine relevant information from such a dialogue? Absolutely.
Like any media-trained on-message IT exec however, Schwartz did his best redirect Plummer and McGuckin’s line of questioning. But, as happens with many inquisitors of Sun, the importance of R&D as well as the developer community that Sun passionately cultivates (as evidenced by the 20,000 or so attendees that were across the street at JavaOne) seems to get too casually dismissed.
Sun could very easily pare back its R&D and interest in developers and become more of a commodities player like a Dell or an HP. Not that those companies don’t have R&D budgets of their own. But the two are in a blood bath for marketshare in what are clearly commodity markets. If you’re like Dell or HP and have figured out how to squeeze a respectable profit out of such a low-margin business, then there’s no shame in being in those wars. With its Opteron-based servers, Sun is actually in one of those wars. But the fact of the matter is that neither Moore’s Law nor the Internet work in favor of these particular commodity markets. Lest you think I’m inventing some argument to defend Sun and Schwartz, I’m not. I’m stealing it from a source that Gartner knows very well: Itself.
At the same event in San Francisco, Gartner research chief and distinguished analyst Steve Prentice said:
Like breakfast cereals, you can now buy a computer in your local supermarket. From the way prices are falling, there will probably come a day not to far away where you’ll even find the computer in the cereal box. Disk storage is rapidly becoming a commodity. I can buy a terabyte of storage on ATA drives for around $300 if I shop around. The prices are falling steadily…..Looking ahead, we can see that commoditization is climbing steadily up the entire technology stack.
The "toys" that come with today’s cereals or Happy Meals are sometimes more sophisticated than the PCs we once used. I’m sure Sun would love to have Kellogg’s or MacDonald’s as customers. But not in that way.
The Internet is another counterveiling force to largely commodities-driven technology plays. In his own advice to Symposium/ITxpo attendees, Plummer was crystal clear that the service model of software delivery is the way of the future when he issued the recommendations "Don’t own. Rent" and "Don’t buy applications. Buy solutions based on service." As you can see from the other blog I posted today, I’m totally with Plummer on this and very much sold on rented solutions based on my own experience. But if that’s truly the direction things are heading, then participants in cereal-box commoditized markets that are looking to make up the difference with customers who are owing apps and insourcing are in for another rude awakening.
