|
The project divides the computing world into two broad camps. First are
traditional computing customers who are happy that Moore's Law steadily
pushes down computer prices. Second are those whose growth rates and
reliance on technology give them an appetite that far outstrips what
the industry can supply.
Sun Microsystems, having returned to revenue growth after years
struggling, is planning to catch the next wave of growth with an effort
dubbed Project Redshift.
The project divides the computing world into two broad camps. First are
traditional computing customers who are happy that Moore's Law steadily
pushes down computer prices. Second are those whose growth rates and
reliance on technology give them an appetite that far outstrips what
the industry can supply.
"Systems for payroll, general ledger, enterprise resource planning
every year require less and less infrastructure. You don't want to hang
out too long in that aspect of the marketplace," Sun Chief Executive
Jonathan Schwartz said at a meeting with reporters here on Friday. "You
have to jump to the other side of Moore's Law, to find the customers
who are 'redshifting,' pulling away from the rest of the market."
Redshift refers to the color change of light from galaxies that are
moving away from Earth because of the universe's expansion; galaxies
farther away are shifted more dramatically to the red than those
nearby. Sun aims its research and development toward these customers,
Schwartz said, yielding products such as Project Blackbox, a data
center conveniently packaged in a shipping container.
"At least from a marketing perspective, Sun likes to be seen as
supplying the cool kids with their gear," said Illuminata analyst
Gordon Haff. However, although Sun has stuck with the idea for years in
various forms, it's hardly unique in trying to tap into the market
today. "Is there any big supplier who isn't going after the
hyper-growth companies?" Haff said.
Schwartz began talking about the idea in October, and Chief Technology
Officer Greg Papadopoulos attached the Redshift name to the plan during
the company's analyst summit in February.
The Redshift concept applies to Internet-based start-ups that are
growing fast, Schwartz said, pointing as an example to Twitter, which
uses Sun technology for its service of broadcasting a person's text
messages to subscribers. "The thing I find so fascinating about the
network is that it has become so consumerized that social phenomena can
take off like a lightning storm," Schwartz said.
But it's not just for Web 2.0 start-ups. A prime market is
high-performance computing, not just in scientific research but also in
business operations such as FedEx's work to make its package delivery
as efficient as possible, Papadopoulos said. "High-performance
computing has insatiable demand. If you halve the price of computing,
people consume twice as much," he said.
Internet-based businesses can fit the Redshift model, Papadopoulos
added, pointing to old-school sites such as eBay and Amazon.com as well
as newer arrivals such as Salesforce.com and Microsoft's Windows Live.
For now, though, the bulk of Sun's business comes from traditional
"blue-shift" companies.
Some might recall a parallel to another expansionist era, the dot-com
bubble. Sun loudly touted itself as being "the dot in dot-com," a catch
phrase it dropped like a hot potato after the bubble burst and Sun's
revenue and profits disappeared with it.
Schwartz has argued more than once that the company shouldn't have backed away from the line.
But Sun did lose track of important business priorities in the dot-com
bubble, Schwartz said: "When you're growing 60 percent, the fish are
jumping in the boat. You're focused on building the biggest boat you
can. You're not focused on navigation."
Schwartz took over as Sun's CEO nearly a year ago and has been very
focused on navigation. The company's pole star is an operating margin
of 10 percent in fiscal 2009, which ends in June 2009. Operating
margin--a measure of financial health consisting of operating profits
as a percentage of revenue--determines how much money a company
generates for cash reserves, dividends or other purposes.
There are some uncertainties about how the company will reach the goal.
Schwartz said he wants to attain it by improving profit margins,
whereas Chief Financial Officer Mike Lehman has a strong focus on
reducing Sun's expenses.
'It's turned 180 degrees around'
The company reported an operating margin of 2.9 percent in
its recent quarter, which ended December 31, and has a 4 percent goal
for the last quarter of the current fiscal year, which ends June 30.
The steady progress has helped Sun with external matters such as
recruitment and sales and internal matters such as employee morale and
motivation, Lehman said.
"A year ago, the conversations were 'Are you going to be around?' Now
it's 'How soon are you going to make 10 percent?' It's turned 180
degrees around," Lehman said.
Schwartz pointed to hiring as another example of Sun's restored
fortunes. John Fowler, executive vice president of Sun's server group,
issued about 70 job offers to college graduates he wanted to hire, and
62 accepted, Schwartz said.
Also at the event:
- Douglas said that in an effort to reduce its greenhouse gas
emissions, Sun has a goal of reducing the amount of carbon dioxide it
produces by 20 percent by 2012 compared with its 2002 levels. Doing so
will save Sun money as well as reduce its environmental damage, he
said.
- Schwartz declared Oracle's attempt to sell a Red Hat Enterprise Linux
clone a dud. "That's had little to no effect on the marketplace. The
barriers to entry to compete against an operating system are a lot
higher than they were historically," Schwartz said.
- Sun will continue to spend more on research and development than most
rivals. Computing power is a commodity, but that doesn't mean that
money can't be made selling computers."Every large company that monetizes a commodity--in financial services,
oil and gas, or power--every single one spends an enormous amount of
money on R&D. Otherwise, you have no differentiation," Schwartz
said. "A few companies lost the ability to do that," he said.
- "A little over half of the customers" Sun has found through its
try-and-buy program--in which customers may use Sun hardware free for
60 days--have never before bought anything from Sun. The company
doesn't have a good measurement of the fraction of try-and-buy
customers that buy the product, though one conversion turned into a $2
million purchase, Lehman said.
Read the original article: http://www.zdnetindia.com/news/business/stories/173448.html
|
Get Informed 
