‘The Worst is Over’

Bhaskar Pramanik

With the UltraSparc processors and Solaris operating system, Sun Microsystems
spanned the computing back-end. Now, with StarOffice to Java desktops, it is
taking its arch-enemy head on. Besides delivering products, Sun’s global
initiatives involve services and technologies in a big way. In a meeting with
Nelson Johny of DQ Channels India, Bhaskar Pramanik, MD, Sun Microsystems India,
explains its strategic alliances and growth strategies, global as well as

How has been Sun’s performance in the recent past?
Sun Microsystems in India is doing great. Last quarter we made good profit.
By and large we showed profit in every part of our business. Globally, services
touched the historic $1 bn mark. The server industry grew by about 46% y-o-y.
Overall the revenue grew by 4% y-o-y and most important we showed good profit of
around $750-795 mn. The message we are trying to give our customer is that the
worst is over. We have an installed base of $138 bn, cash in bank of about $7.5
bn and very little debt, in fact we have more liquid cash than IBM.

So, does that make Sun an efficient organization than your competition?
Our cost structure is much better than what it was, though it’s not the best
in the industry but something that we seek to change. We have now reached a
stage where we think we are an efficient organization. Most importantly, we
continue to generate cash from our operations over the last three to four years.

Which product segments are showing good growth?
A lot of products that were in the pipeline are out in the market. Our
UltraSPARC IV has been a big hit. Wherever customers have used it, have seen
immediate increase in performance at least two times. The StarOffice seems to be
doing well in India. And globally, the number of people using Java Enterprise
System (JES) has increased by a huge factor. JES business grew in India by about
30- 40% just last year. And we expect this growth to continue.

What has been driving Sun’s growth in India?
In India we have doubled our business, it is primarily being fuelled by the
telecom and the financial services industry. We expect that in the coming years
these are the two sectors that will continue to drive growth. We have also been
very successful in the SMB space. A lot of our revenues have grown from this

Sun recently signed a pact to adopt processors from AMD. Why does Sun need
them in addition to Intel and SPARC processors?
We have made three strategic alliances over a period of three to four
months. The first being AMD, we are able to come out with a series of low-cost
servers targeting the commercial market. This gives us a footprint into a
market, which we were not earlier addressing. It is designed to support Linux,
Solaris and Microsoft.

Which are the other two strategic alliances?
The other alliance we did was with Microsoft, our customers wanted it, and
so we are looking at how we can interoperate with each other. And the third
alliance signed was with Fujitsu. They have been our strong partners. They use
the SPARC processor and the Solaris operating system to build huge mainframes.
We will collaborate with them to make their processor based on SPARC a lot
better using new technology which we are coming out with.

What’s next after UltraSPARC IV?
SPARC IV was well received in terms of performance. We do realize that the chip
design is hitting the laws of physics. As the chips get denser it becomes
difficult to get more performance. Intel continues to have this problem, they
get a new processor but the performance doesn’t seem to go up by such an
extent. It is to do with the latency between the memory and the CPU. So with our
new chip multi-threading technology, we are going to leapfrog performance of
chips based on the same level of density which you currently have or slightly
higher. Otherwise denser and denser chips are not going to solve the problem,
there are heating issues and reliability issues and the fabrication costs are
becoming too high.

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