Catching Attention

Analysts had been keenly watching Sun Micro’s Q2 product launch to see if

the company was showing signs of getting on the offensive again. While the

plethora of announcements early April were well received, not many believe Sun

is on the warpath as yet.

The

launches included two entry-level servers called the Sun Fire V210 and V240–two

processor systems built around the company’s long awaited UltraSparc IIIi

"Jalapeno" processors. Made by Texas Instruments on a new

130-nanomenter manufacturing process that uses 300 mm silicon crystals, the

chips have relatively higher speeds, lower power consumption and more circuitry.

The process also makes it cheaper to build than the UltraSparc III and is Sun’s

answer to Intel Xeon based low priced machines. Both machines–in fact

"all new Sun releases from now on are capable of virtualization and

provisioning to fit into its already announced N1 strategy," says Anil

Valluri, Sun India’s Director, Systems Engineering. Priced around the $3,000

range both systems ought to give its competitors a run for their money in the

short run. In the long run, Sun is betting on the fact that the market for

low-end and thin "blade" systems is one of the fastest-growing

segments. IDC predicts that they will account for about half the spending on

servers in three to four years and the company believes it is getting itself

into a position to benefit from that.

Interestingly, Sun had introduced its own servers with chips from Intel and

later AMD. However, it was a decision that came after conflict–both internally

and with Intel–and the company seems to be trying to keep most customers still

with the UltraSparc. It is also expected to announce new higher end systems

around a forthcoming UltraSparc IV chip later this year.

But the two Sun Fire systems were not the most interesting part of the

launch. It is an entirely new launch philosophy that has at least as much to do

with marketing as with products themselves.

Getting attention



Sun calls it NC03 continued–Q2. (Network Computing 2003 — Q2 release) It’s

a new release strategy announced early this year under which the company

consolidated and timed its year-long launches into four major ones—once every

quarter.

"Earlier we would have 200 launches a year," says Valluri. Some of

these would be soft launches announced through press releases. Some of them mega

launches. The problem with hundreds of releases a year–"we weren’t

getting the attention of the target market." So Sun consolidated and timed

all product launches and the fact that most people expected and knew a Q2 launch

was coming makes Sun believe the attention-getting strategy is working.

What the product launches will not do however is take away the kind of

attention that its quarterly results keep getting. A week after the product

launches Sun’s Q3 results for the fiscal were announced. With revenues down

again and flat earnings per share, the company got a royal snub at the Nasdaq on

the day that most other tech shares were gaining.

In at least eight straight quarters of loss, with one exception mid last

year, revenues were down 10.2% to $2.79 billion for fiscal Q3 compared to the

same quarter last year–a good 5% below estimates. Net income was $4 million

compared to last year’s net loss of $37 million. And this after CEO Scott

McNealy had said, even if cautiously that, "things are beginning to look

up."

Technology-wise the company has other eggs in the nest, not the least of

which is throughput computing. Sun has always thrown technology to deal with

complex problems. This time though it faces problems that technology or

marketing alone will not solve. It needs more than just product launches to

catch that right kind of. It needs to show it’s making money.

Sarita Rani