Will anyone buy a cow if they can get the milk for free? Will this cowless consumer pay for milking lessons? Will I ever drop the barnyard metaphor and get to the bloody point?
Today, Sun Microsystems
Alleged to cost half-a-billion bucks to develop, the operating system won't be paying for itself through sales. That's because Sun plans to give it away free. The quotes being fed to the hungry press include quips comparing the move to wicked-cheap inkjets from Hewlett-Packard
And in a direct salvo at Linux -- especially Sun's favorite whipping boy, Red Hat
open source at some point in the future, which will -- hopefully -- attract an organic ecosystem of outside developers, as Linux enjoys.
But what's this? Doesn't Sun already sell Linux-based systems as part of a strategy to gain market share and then move customers up the ladder to Solaris? Yup. So what's become of that strategy? Mum's the word.
Can the firm actually make money this way? That's also a question for the future. The free or nearly free software model is being mined -- with varying success -- by Linux providers everywhere, including firms as diverse as IBM
As I mentioned in reviewing last quarter's numbers from Sun, the firm seems to be struggling a bit with what exactly its business model is going to be. Give away machines for free and charge for software and service? Maybe. Sell machines and make it up on service? Maybe. The trouble for investors is that management was more than a little tight-lipped when asked for specifics.
One distinct advantage that Sun has is the fact that its OS runs on a vast variety of machines, from old x86 systems to newer 64-bit chips, on up to big iron like Sun's SPARC boxes. If Sun can get IT users hooked on its OS by offering it free upfront, that could mean a big revenue boost down the road. But it could also come around and dim the lights pretty quickly. Keep in mind that product revenue accounted for more than 60% of the top line in the last quarter. And service revenue is only marginally more profitable than products -- 2%. A major drop in product revenues that's not offset by an increase in service revenues could provide some major volatility on the top line, the bottom line, and the stock price.
For related Foolishness:
- See how Sun keeps investors in the dark.
- Sun makes nice with Kodak.
- Just how badly is AMD's Opteron whomping Intel?
- Should you ring up some Red Hat?