Sun Microsystems' most recent quarter took a hit from a slumping U.S. economy, according to Sun CEO Jonathan Schwartz. Revenue from Sun's server computers and storage products fell 2.8 percent. The as it seeks to balance expenses with growth.
But from where will the growth come?
Sun is betting big on open source to drive adoption, which should, in turn, drive revenue (done right). I spoke with, the other day, and I asked him about whether the strategy is, in fact, working. How much growth is Sun seeing in its software business?
As he indicated, separating out software tells an incomplete revenue picture. Software for Sun is a driver of software, hardware, and services revenue. It's not an end unto itself.
If last quarter is any indication, however, software--whether open or proprietary--has yet to provide a real spur to its hardware and services business. This is perhaps worrisome, given that so many open-source businesses with which I'm familiar are thriving in the economic downturn. A bad economy has been very good for open source.
But Sun's slowness to feel these effects is perhaps not surprising, given that its renewed commitment to and investment in software is of fairly recent vintage. The company will need time to plant the software seeds and let them grow.
The question for Sun will be one of time. Will it be accorded enough by Wall Street to let its software strategy blossom? Using Novell as an example, Wall Street gave it several quarters to get it right. It's unclear whether Wall Street will give Sun the same leeway, though Sun has a history of proving detractors wrong and eventually getting its ship back on track. (How many times has the death of Sun been predicted?)
Another question for Sun will revolve around how much open-source software will be required to move the hardware and services needle., is a good candidate to jump-start movement in hardware and services. Will it be enough?