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Commentary: Sun must shine on software

Ed Zander's imminent departure as president and CEO highlights the need for the company to evolve beyond its hardware-first focus.

By Jim Cassell, Andrew Butler and Yefim Natis, Gartner Analysts

Ed Zander helped build Sun Microsystems into a server powerhouse. His imminent departure as president and chief operating officer highlights the need for the company to evolve beyond its hardware-first focus.

See news story:
Zander-free Sun could ruffle customers
Zander's resignation, which follows closely upon the departure of several other Sun executives, underscores the company's arrival at a turning point. The hardware-first focus that enriched it in the 1990s has begun to falter in the face of the information technology industry slowdown, increasing competition and a more complex market.

Zander led Sun into dominance of the server market, but that position came at the expense of software and services. Despite significant investment, the company's software initiatives have proven only moderately effective because they lacked complete commitment from management. Moreover, many investors measure Sun's performance based largely on server sales, an attitude that makes changing the hardware focus more difficult.

Other challenges that Sun must overcome include the following:

• The company relies too heavily on selling servers based on Solaris and Sparc, of which Zander has been a strong proponent. Enterprises increasingly seek more flexibility from hardware vendors than Sun traditionally has provided.

• IBM has taken away market share from Sun in Unix servers. Linux could take away market share in the low-end, high-volume market.

• Sun's new Sun Fire 15K faces serious competition at the high end, which its predecessor, the Enterprise 10000, didn't face.

• Services have become a major part of enterprise requirements, but Sun trails IBM, Unisys, and the soon-to-merge Hewlett-Packard and Compaq Computer.

• Policy-based computing initiatives have become important for enterprises. Sun has not garnered as much "mind share" in this area as IBM (Project eLiza), HP (Utility Data Center) and Unisys (Server Sentinel).

The reorganization of top management will enable Sun to revise its business model by making software and services a strategic focus. It could best achieve that goal by appointing a software-focused executive as the next president or chief operating officer.

At the very least, Sun must give Jonathan Schwartz, newly appointed to head the Sun Open Net Environment unit, the freedom and resources to build a leading software platform. Otherwise, Sun will not likely succeed in software and services any better than it has so far.

(For a related commentary on Sun's server line, see gartner.com.)

Entire contents, Copyright © 2002 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.