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Can Sun avoid the big squeeze?

Under pressure from IBM and Microsoft, Sun Microsystems' Shahin Khan takes his job as chief competitive officer very seriously. These days, it's a role that requires just as much defense as offense.

Facing Microsoft on one side and IBM on the other, Sun Microsystems finds itself uncomfortably squeezed by the most powerful software and hardware companies in the history of the computer industry. And then there's Linux and all that it represents.

Sun has never been shy about getting in public licks at the expense of the competition. But meeting this challenge will require far more than just another spin job, and more than ever, Sun must convince customers and developers to buy into its product and technology vision.

All this at the same time that corporate IT spending for big-ticket hardware purchases--Sun's bread and butter--remains soft. Indeed, a recent survey of 225 CIOs by Morgan Stanley found that a majority of them don't plan to buy more technology than they did last year. That's bad news in bells for Sun, whose once high-flying stock remains mired in single-digit range.

So it was that about six months ago, Sun moved Shahin Khan into the role of its chief competitive officer. It's an amorphous title for an executive whose role encompasses the job of technology pitch man with corporate hit man.

Khan has since become a familiar name on the front lines in an offensive that Sun CEO Scott McNealy calls the air warfare against Microsoft and the ground warfare against Big Blue. CNET News.com recently caught up with Khan, following the conclusion of the company's annual Sun ONE conference in San Francisco.

Q: I wanted to chat about the technology landscape, but first, tell me about your role at Sun. The title of chief competitive officer isn't that widespread in the computer industry, is it?
A: No, it's not. I usually say at this point, aren't we so hip to have one of these? (laughing) I spend lots of time with customers, with technologists within Sun and with our partners. The idea is to get a grasp of customer and tech trends and customer needs.

And the reason for this role?
We kind of expected that competition would become very intense three years ago--and that was in the absence of an economic slowdown, which has made it fierce. It's made our competitors behave in ways they didn't behave before and we need to be prepared for that. I also serve as little bit of an industry watchdog and dispel myths and clarify facts.

Being an open-systems vendor is not about selling Linux; it's about not selling closed systems.
So you're the point person for the company's anti-Microsoft and anti-IBM campaigns?
As Scott McNealy puts it very well, we have two battles strategically before us...the air warfare is with Microsoft as compared to the ground warfare against IBM

Then Sun is feeling pressure from IBM these days?
No, IBM has given us the ultimate compliment of targeting us, and that's because Sun started the 90s decade as a workstation vendor and left as champions of the data center. That was a heavy dose of reality to IBM; they pointed all their guns at Sun, and we've been successful at their expense.

Well, IDC and Gartner just came out with numbers that suggest otherwise. According to IDC, Sun sold 89 Sun Fire 15K systems in the fourth quarter while IBM sold 310 p690 Regattas. And Sun is losing market share in the overall Unix server market while IBM is gaining. Isn't that true?
We did take exception with IDC's numbers. IBM's system business has been flat for the last four to five years, hovering plus or minus 5 percent...IBM carries 15 different product lines and doesn't disclose how much (it makes) for each one. They leave people like IDC having to guess. That makes it impossible for these guys to have an accurate view.

On the subject of IBM, lots of rhetoric has been flying. You were quoted recently as saying the p690 on a good day is slightly better than a 6800, while the top technologist behind IBM's Power4 design has criticized the Sun Fire line as using an outdated design.
There is a lot of rhetoric, and I acknowledge that makes it difficult for customers to figure out who's saying what. We stand by our view. My comments were based on fact. It's more than six months since the Regatta was announced, and IBM's done two and a half benchmarks since. Why has it taken them six months to do it? We've published a dozen benchmarks since announcing the (Sun Fire line).

Back in the mid-80s, companies didn't publicly call each other out. Why the change?
Part of that is because it's allowed to do things like that. Part may be cultural. We tend to be a little more graphic than Australia or Germany, where public name-calling is not good form. But I'm telling you, I'm seeing changes there too.

I think the computer industry is very fierce. When you're in an industry where things change as fast as they do, there are different points of opinion when everybody's intellectually honest...We may say things that are outrageous, but we've checked them.

The fact that we did not have a public statement about Linux was perceived by many as Sun attempting to protect Solaris--which was not true at all.
Is that particularly helpful to CIOs?
Sometimes CIOs come to us--and this is how we got into it when a CIO sent us an e-mail saying, "This is what IBM is saying about you, and I'd like you to, point by point, respond to their points." Then you've got to do what you've got to do for your customers.

IBM says that Sun still farms out a lot of local work to third-party companies. Isn't it true that competing in the data center realm means you'll need to offer global, end-to-end services when CIOs don't have the luxury of time to buy a box from one vendor, a solution from another, etc?
I don't' think we would be entrenched in the data center if we were just pushing boxes...Even though Sun's known for the strength of its products, our service organization has been the been fastest growing part of Sun.

But it's a speck in the ocean compared to IBM's Global Services.
Yeah, but it's a different model. What we'll do is have strong partnerships with people who have domain expertise. The problem with IBM is that it's very easy to get out of their domain expertise...Our model is based on partnering in a strong way with all the best suppliers to offer a best-of-breed offering in an elegant fashion.

What you're saying is that there are two different philosophies about this.
Yes. Two different philosophies. Our view is that Sun plus partners is much larger than IBM.

All right, let's talk about another area of competition. Sun has always positioned itself as the vendor selling general purpose systems for mid- to large-sized enterprises using open standards. But is that an increasingly tough position these days? Solaris/Sparc is not perceived as an open system.
It's interesting that 12 years after the advent of open systems, we have to explain what open systems are. IBM has been muddying the waters. Being an open systems vendor is not about selling Linux; it's about not selling closed systems.

Well, why should a company buy a Linux system from Sun? You guys reversed course earlier this year and now you're offering under $1,000 Solaris servers, and you're committing to sell Linux-based Intel servers.
Our public embrace of Linux came after several years of private embrace. We just opened the curtain. It's in addition to Sparc/Solaris. It's a fantasy of the competition that it's instead of Sparc/Solaris

For the foreseeable future--five to six years--we think Sparc will be the safest 64-bit choice in the market. It is an IEEE standard, you can license for free. Solaris' cool implementation...when you talk to a Solaris customer, they can contemplate moving off of Sun. But when you talk to an NT customer, they can't contemplate doing that. Our lock-in is our openness.

How would you characterize Sun's relationship with the Linux community?
I would say the relationship is a rapidly improving one. The fact that we did not have a public statement about Linux was perceived by many as Sun attempting to protect Solaris--which was not true at all. At the time, we were busily handing over millions lines code.

What's been the biggest hitch in that relationship?
I don't know. Maybe the fact that Sun wasn't actually selling a Linux box. Even though we were doing that with an appliance, I guess that didn't count. But when I look at IBM's billion-dollar investment (in Linux), most of it is in self-serving moves, like porting its own proprietary platforms to Linux or in advertisements, which are equally useless.