Sun Microsystems Aims at New Market Segment
If imitation is the sincerest form of flattery, then the folks at Sun Microsystems--never famous for modesty--should be feeling especially good about themselves these days. From International Business Machines to Next Inc. to the 21-company Compaq-Microsoft-Digital Equipment consortium announced last Tuesday, nearly everyone in the industry is trying to follow Sun’s lead in selling high-powered desktop computers.
On Sunday, Sun will answer the challengers, not with new products but with an aggressive advertising campaign that includes TV spots touting the virtues of “client-server computing.” Sun might be radically overestimating the number of people who can make sense out of such a term, but many an industry pundit has learned that Sun’s unconventional strategies have a way of turning out right.
“Their competitors are terrified,” says Richard Shaffer, principal of Technologic Partners in New York. “They are good engineers and good designers, and they’re very aggressive, like a wrestler who gives a couple of karate yells to intimidate the opponent.”
Sun, founded in 1982, has become the fastest-growing company in the Fortune 500 with its relatively cheap, fast versions of the powerful workstations favored by scientists and engineers. Its machines have popularized a new type of design called reduced instruction set computing (RISC) and given new life to a complex but powerful software operating system called Unix.
And by offering licenses to any company that might want to produce Sun clones--a strategy considered “preposterous” when it was unveiled, as Shaffer recalled--Sun has helped create an industrywide movement toward “open” computer systems that allow easy connection among different types of machines.
The company now has its sights set on the mainstream commercial computing market, a far bigger--and far more competitive--segment than technical workstations. Largely in response to this challenge, Compaq, Digital Equipment and Microsoft spearheaded the formation of the Advanced Computing Environment consortium, which aims to set standards for a RISC computer that’s more open and easier to use than Sun’s.
When reports of the ACE effort emerged, Sun Chairman Scott McNealy responded with typical bravado: “Those who can, do. Those who can’t, consort.”
But now, Sun is pushing hard to raise its profile among mainstream computer buyers and respond to the perception that for all the hype, Sun’s design really isn’t all that open.
The ad campaign--which will include TV spots, an eight-page advertisement in the Wall Street Journal and a broader print campaign--marks the first time Sun has gone beyond narrow, trade-oriented advertising. Larry Hambly, vice president of marketing, acknowledged that it was difficult to say how the company’s somewhat arcane message would play on television.
That message, contained in the phrase “client-server computing,” is that powerful desktop machines tied together in networks offer a better, cheaper way to perform many tasks than big mainframes or minicomputers long favored in the corporate world.
“We’re aiming at technically sophisticated computer users” in business, Hambly said. “We’re very well suited to their applications, and those guys don’t know us well enough.”
Sun says about 30% of its revenue now comes from these commercial customers, although Tom Kucharvey, president of market researcher Summit Strategies in Boston, pegged the figure at closer to 20%. The segment is clearly growing rapidly, though. Next President Steven P. Jobs, trying to define a niche for his company, calls it the “professional workstation” market and says it’s more than doubling every year.
Jobs, who considers Sun his major competitor, is one of many who question Sun’s rhetoric about open systems. “They’ve done a great job marketing that, but it isn’t true,” says Jobs. “When you buy into Sun, it’s just as proprietary as the Macintosh or anything else.”
Indeed, only a few small computer companies are making Sun-compatible machines, and there’s a widespread perception in the industry that Sun controls the evolution of its software operating system for its own benefit, rather than making it truly open.
Even Hambly acknowledges that “we’ve got a lot to prove there.”
SUN MICROSYSTEMS’ RAPID GROWTH
In millions of dollars, fiscal years ending June 30
‘85: Net Income: $8.5
Revenues: $115
‘86: Net Income: $11.2
Revenues: $210
‘87: Net Income: $36.3
Revenues: $538
‘88: Net Income: $66.4
Revenues: $1,052
‘89: Net Income: $60.8
Revenues: $1,765
‘90: Net Income: $111.2
Revenues: $2,466
Source: Sun Microsystems
