Sun Micro’s Clone Strategy a Risky Path
Encouraging all comers to make cheap imitations of your product might seem like an odd business plan. Sun Microsystems’ daring pursuit of just such a strategy will soon be put to the test.
As the market leader in computer workstations--powerful desktop machines traditionally used by engineers but now finding their way into offices--Mountain View-based Sun hopes that licensing its technology to other manufacturers will expand the market and establish its design as a standard, the same way personal computer “clones” solidified the International Business Machines standard and drove the growth of the entire PC industry.
And the Sun clone market may be ready to take off. LSI Logic today is expected to announce that it is providing several major computer makers with chips, software and specifications that make it easy to produce a Sun clone.
LSI is also expected to announce that a version of the Sparc microprocessor--the brain inside the Sun machines--that it had produced only for Sun will be generally available. Opus Systems, a small company that has been working with LSI, is also selling a complete “manufacturing kit” for Sun clones.
“This will put a lot of companies in the Sun clone business,” said Michael Slater, editor of the Microprocessor Report in Sebastopol, Calif. “It’s a perfect setup for Far Eastern companies to sell at very competitive prices.”
Several Sun clones are already on the market, and analysts expect as many as a dozen companies, including some low-cost Asian vendors, to introduce Sun clones at a big computer show next month.
Still, it’s not clear that Sun’s strategy will succeed. The company needs clones to broaden its base, thus encouraging software developers to write programs for Sun machines and making customers more comfortable that the Sun standard will survive. But if workstations do not make significant inroads into the PC-dominated office environment--and many believe they won’t--then Sun could find itself fighting hordes of cheap clones for a piece of a slow-growing market.
“Sun is on the horns of a dilemma,” said William Bluestein, an analyst with Forrester Research in Cambridge, Mass. “It badly needs a clone market to exist, but it’s creating competitors.”
Bill Keating, director of technology marketing for Sun, brushes off the possible threat from the clones. “The key factor is market expansion,” he said. If the workstation market continues to grow at something approaching the 40% to 50% annual rate of the past several years, there will be plenty of room for both Sun and clones, aimed at specialized markets, to prosper, he said.
But for that kind of growth to continue, Sun must simultaneously win the standards battle with other workstation vendors, and convince personal computer users that they need the added power of workstations. “The supply (of Sun clones) will be there,” said Slater. “But I’m not sure the demand side will be there. The jury is still out.”
Sun is battling personal computer makers and other workstation companies whose machines, like Sun’s, use the UNIX operating system to control their basic functions. Sun has developed its own version of UNIX in conjunction with American Telephone & Telegraph. But other workstation vendors, including IBM and Digital Equipment, have banded together to promote a different version.
Sun also has developed its own microprocessor, called Sparc, which uses so-called reduced instruction set computing (RISC), a technique that vastly increases the computing power that can be packed on a single chip. But IBM, Hewlett-Packard and MIPS Computer have developed their own RISC processors, and it’s far from certain that Sun’s Sparc will emerge as the standard.
Sun hopes that workstations based on Sparc chips and running the UNIX operating system will displace machines that use Intel’s 386 and 486 microprocessors and run Microsoft’s MS/DOS operating system. Already, the cheapest Sun machine costs less than $5,000, and thus is price competitive with high-performance personal computers--and more powerful by most measures.
But a UNIX system is harder to use, more complicated to maintain and, perhaps most important, has far less software available than an MS/DOS machine. Although Sun has made progress in getting major software developers such as Lotus Development and Ashton-Tate to write versions of popular programs to run on Sun machines, the library of applications is still far smaller than for traditional personal computers.
Tom Kacharvy, an analyst with Summit Strategies in Boston, said the clone market would probably develop slowly. “This is not a PC market. I’m not sure it’s developed enough that people will feel comfortable buying a UNIX workstation from a company that might not be around.” Clone makers, he said, would probably focus on specialized niches.
Sun, scrambling to find a happy median, has taken some steps to prevent clones from hurting its own business. Slater said Sun has been slow in releasing some of the technology needed to make a clone, presumably to give itself a better head start. Kacharvy said the company has also managed its distribution channel carefully to prevent dealers from selling both Sun machines and cheap clones.
THE WORKSTATION MARKET
1989 worldwide market share for workstations based on total factory revenue of $6.2 billion SUN: 28.7% HP/APOLLO: 26.4% DIGITAL: 15.9% INTERGRAPH: 6.0% SILICON GRAPHICS: 5.2% OTHERS: 17.8%
Source: Dataquest
1989 worldwide share of systems market by product segment based on total factory revenue of $101.9 billion PCs: 34% WORKSTATIONS: 6% MIDRANGE: 29% MAINFRAMES: 29% SUPER-COMPUTERS: 2%
