THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : THE FAST TRACK : Sun Microsystems Defined Its Market, Then Stayed With It
To say it has all turned out better than the founders of Sun Microsystems expected wouldn’t exactly be true.
From the beginning in 1982, the four brash, young UC Berkeley and Stanford University graduates who founded Sun knew that they had every chance of building a hot computer company if they stuck to their original game plan: building desktop computers for power-hungry, “macho” users such as scientists, engineers and number-crunching researchers.
Today, some seven years later, Sun has just completed its third consecutive year of nearly doubling its sales, most recently to slightly more than $1 billion. The accomplishment earned the Mountain View company the No. 3 spot on The Times’ list of the 100 fastest-growing companies in California, an achievement of some note, because such lists tend to favor smaller companies whose lower base can more easily produce high growth rates.
According to Ed Zander, Sun’s marketing vice president, the company decided early on to concentrate on growth and developing market share, as much as profits.
“We realized that we had to achieve a critical mass very quickly to survive the consolidation that we’re seeing now, and that we’ll continue to see,” Zander explains. “We knew we needed users who would demand that the industry accept us as a serious player.”
To serve the needs of demanding power users such as rocket scientists, medical researchers and aerospace engineers, Sun became the first popular computer maker to rely exclusively on Unix, the powerful set of computer operating instructions developed by AT&T.;
The move cemented Unix as the environment of choice for many applications and made Sun the de facto vendor of choice within the scientific community. Market researchers say Sun holds nearly 30% of the market it serves.
But Zander says Sun is hardly sitting still. “We have more opportunities available to us than we can take advantage of,” he says.
The trick for Sun now, Zander says, is to manage the inevitable growth even more carefully than the company originally courted it. The goal, now he says, is to become a general-purpose computer company in the mold of an IBM or Digital Equipment Corp.
Zander says the goal sounds easier than it really is, especially given the explosive growth opportunities within the computer industry.
“You can get very piggish in this industry, especially when you’re hot,” he says. “But that’s what leads companies down the wrong path. We’re trying to stay focused.”
FASTEST PROFIT GROWTH
Companies ranked by two-year average annual growth in profits.
2-year avg. 1988 1986 annual profit income income Rank Company growth % ($ millions) ($ millions) 1 Sun Microsystems Inc. 135.8 66.43 11.94 2 Amdahl Corp. 133.2 213.83 39.32 3 American President Cos. 112.7 81.25 17.95 4 Argonaut Group 111.3 101.80 22.80 5 Oracle Systems Corp.* 107.6 67.30 15.62 6 First Capital Holdings 93.6 52.72 14.06 7 National Education Corp. 75.5 46.14 14.98 8 Homestake Mining 71.5 66.40 22.57 9 Autodesk Inc. 67.7 32.69 11.62 10 3COM Corp.* 62.2 29.31 11.14 11 Apple Computer Inc. 61.2 400.25 153.96 12 Atlantic Richfield Co. 60.4 1,583.00 615.00 13 Raychem Corp. 60.2 125.28 48.79 14 Chevron Corp. 57.2 1,766.00 715.00 15 Pacific Enterprises 56.3 222.00 90.83 16 Litton Industries Inc. 53.2 167.03 71.13 17 Carolco Pictures Inc. 52.3 28.11 12.11 18 Seagate Technology 49.6 77.31 34.53 19 Caesars New Jersey Inc. 48.3 32.51 14.79 20 Glenfed Inc. 46.3 163.69 76.43 21 Walt Disney Co. 45.3 522.00 247.30 22 Western Digital Corp. 44.6 42.96 20.56 23 Franklin Resources Inc. 43.7 66.31 32.10 24 Union Bank 40.0 60.22 30.73 25 Caesars World 37.0 77.03 41.01
*See exceptions, page 38.
