The proof is in the numbers, dearest Fool;
A rising Sun came up against a slow --
a lesser uptake of its hardware tools;
It's elsewhere that the customers do flow.
The numbers are in, and it looks like Sun Microsystems
CEO Jonathan Schwartz mentioned that software and services were doing well and validating Sun's business model, but tellingly omitted any mention of the hardware side. Sun used to be the big dog in the Unix server market, at least as commanding a presence as IBM
Of course, the competition has long offered both of those alternatives for many years, although IBM still ties its AIX platform to the proprietary POWER chips. Is the turncoat strategy really paying off for Sun? The Intel option is too new to get a read on, and the Opteron is currently not perceived as a top performer, so it's hard to get a read on the effectiveness there.
In general, I wouldn't be surprised to see Sun phasing out its hardware operations over time -- first the in-house processor design and then perhaps even system integration. Solaris and Java look like the future, and it's much easier to achieve efficient operations in software than in hardware.
In the short term, even that strategy seems tenuous at best. Businesses are starting to get comfortable with the idea of Microsoft's
- Foolish Forecast: Sun Opens to New Realms
- Brother, Can You Spare $350 Billion?
- Do the Math: IBM Wins
- This Stock Is Cheap -- or Is It?
Intel and Microsoft are Motley Fool Inside Value selections.
Fool contributor Anders Bylund is an AMD shareholder but holds no other position in any of the companies discussed here. This article was written on OpenOffice, free word processing software derived from Sun StarOffice. You can check out Anders' holdings if you like, and Foolish disclosure will make your day, every day.