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Sun strategy: woo Net start-ups

Sun's new program is designed to lure Internet start-ups with inexpensive products in hopes they will become more lucrative customers further down the line.

Hook 'em while they're young.

That's the philosophy of Sun Microsystems, which has begun a new program designed to lure Internet start-ups with inexpensive products in hopes they will become more lucrative customers further down the line.

The new program packages "incubator bundles" of Sun hardware, software, and attractive financing terms, said Doug Kaewert, a vice president of market development at Sun. Though he wouldn't say how deeply discounted the products and services would be, he said the discounts are deep enough that Sun doesn't expect to make money on the products--at least in the short term.

Basically, the program lets the start-ups get the Sun products cheap during their development phase. They only have to pay full price if they buy Sun products for use in their live products, Kaewert said. "They time their payments to us, so it roughly corresponds to when they have a revenue stream," he said.

Sun expects some duds in the program, with start-ups that fail or get acquired by companies uninterested in Sun products. But overall, Sun expects to come out ahead. "The goal is when they grow up to be big companies, they'll grow up to be big companies as partners of Sun," Kaewert said.

The program puts more pressure on Hewlett-Packard, which has had difficulties selling its Unix servers while Sun has thrived and IBM has turned up the heat. Sun wants to make sure it stays ahead, though: "What was good enough a year ago is not good enough now," Kaewert said.

Sun's sales force also will feel the heat. The salespeople's salaries will be tied into the program such that they earn their pay only when the start-ups progress from the test phase. "We pay them when [the start-ups] come up and deploy successfully. The key thing is getting into production," Kaewert said.

The deal isn't available to established companies with new projects, he said, though they still will be able to get products at a discount.