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Will Sun Shine Again?

Posted on Friday, Apr 20th 2007

Struggling under the pressure of a vertically integrated business that had become obsolete over the last 7 years since the dotcom bust, Sun Microsystems changed CEO in April 2006. Scott McNealy stepped down after 22 years at the helm. Jonathan Schwartz assumed the chief executive’s responsibilities.

In the last 12 months, however, dotcoms have come back with an absolute bang. This time, the nomenclature is different. Web 2.0. Office 2.0. Web 3.0. SaaS. Enterprise 3.0.

However, the common denominator is that these businesses are predicated upon millions of users interacting with a web site. Buying things. Reading articles. Viewing videos. Listening to PodCasts. Interacting with the community. Uploading pictures. Managing projects. Serving Ads. Processing Transactions.

No matter what the precise activity is, the common denominator is the requirement for a scalable, failsafe website that can serve as the environment for the interaction.

If you look at what Google has built, it is a massively scalable datacenter that can support such interaction at a frightfully large scale. The same with Salesforce.com. YouTube. MySpace. Photobucket. Facebook.

Wait a minute! Wasn’t that Sun’s core competency? Building massively scalable datacenters?
True, the computing pricepoint has fallen drastically. But is there something that Sun should learn from Salesforce.com’s incubation program? SF.com is renting out its infrastructure in exchange of equity to startups!

Philippe Courtot, CEO of Qualys, identified one of the key differentiators for Software-As-A-Service companies as Infrastructure At the Scale of the Planet. Google has accumulated some of the best brains in distributed computing, and cooked up their own recipe for their planet-scale infrastructure. Qualys itself, an outsourced managed security services provider, has invested $75 Million to build its own.

But what about all the newer ones who will need to scale to that extent? Can Sun not power them? Can Sun offer a model where such humongous investment is not required? After all, Sun’s scalable, distributed computing capabilities were some of the absolute best in the industry. And now that they are willing to abandon the cloed-end vertical integration model of Sun-SPARC-Solaris, perhaps, that real value proposition they bring to the table is building massively scalable data centers for Web 3.0 and Enterprise 3.0?

Good thing, Sun’s CTO Greg Papadopolous understands this. Some excerpts from a recent Economist story are below:

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But, says Greg Papadopoulos, Sun’s technology chief, there is a parallel “universe” that is expanding quickly. It contains unusually demanding customers such as FedEx, which needs big computers to route trucks and aircraft efficiently; drug firms that need to model complex molecules; weather and climate forecasters; and fast-growing “Web 2.0” start-ups that handle huge amounts of data, such as video and blogging sites.

Mr Papadopoulos, borrowing from astronomy, calls this expanding constellation of clients a “red-shift” market. As the universe expands, light from galaxies moving away from Earth appears shifted toward the longer (and hence redder) wavelengths of the spectrum. Light from stars and galaxies moving towards Earth, by contrast, would be blue-shifted. Sun’s strategy is to keep fighting rivals such as Hewlett-Packard (HP), IBM and Dell for the traditional “blue-shifted” customers while also targeting the more interesting “red-shifted” customers.

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