Sun Turnaround == Sun 2.0?

Employees at Sun are feeling good again.  “Inside the company, the energy level is dramatically different.” said Sun CFO Mike Lehman.  The turnaround is coming after five years of poor to mediocre fiscal performance at Sun.

Sun’s financials from last quarter show 18 per cent growth of their SPARC servers (compared to 9 percent average growth in the industry) and good growth in x86-based server sales too.  That’s the first quarterly profit for Sun in more than 1.5 years.  Sun grew market share in the server market by 1.2 per cent, putting it in third place behind IBM and HP.  That’s great progress, but some analysts still think that Sun has a way to go — the cost structure remains bloated and their $2 billion R&D budget lacks disciplined product focus.

Sun’s strategy under Schwartz is to target selling into companies who view IT as a competitive advantage rather than as a cost center.  That means higher-end sales and higher margins.  In particular, Sun is providing innovation in the areas of Storage and Web Infrastructure.  Sun’s relationships with AMD and Intel have given it some credibility as an x86 vendor.  Sun is also active in the area of virtualization, and they have come up with innovative ideas like their BlackBox-Project datacenter-in-a-box.

Sun has embraced Open Source software as a tool for promoting and selling their hardware.  After the lull from the dot-com bust, web development and deployments have accelerated again and Sun is attempting to position Solaris as the “premiere platform for this environment”.  In an effort to popularize open source Solaris, Sun is offering as an alternative to the popular LAMP (Linux/Apache/MySQL/PHP) open source development stack one that is based on Solaris: SAMP (Solaris/Apache/MySQL/PHP).

Sun’s open source Solaris hasn’t gotten the buzz that Linux has, and many people don’t yet even realize that it is now open source.  It will be interesting to see if SAMP catches on and if it isn’t too late for Solaris to go after Linux.  Recent departures of two top-level Solaris executives have generated some questions about what’s happening in Sun’s Solaris group.

Sun’s acquisition of StorageTek in 2005 looks to have been a good move and has allowed them to round out their offerings of enterprise storage products.  For example, Sun offers a general-purpose x4500 hybrid server/storage box as an alternative to other vendor specialized proprietary systems.

Overall, Sun has started a turnaround that few predicted, but they still have a lot of work in front of them.