Emergic: Rajesh Jain's Blog

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Sun’s Rise and Fall

August 22nd, 2003 · No Comments

Kuro5hin has a fascinating and detailed discussion on Sun: “Sun began the 1990s in an unenviable position. Back then, Sun was mainly a manufacturer of Unix workstations for scientific and technical computing. This market was both crowded, and widely expected to decline as workstation users migrated away from Unix to cheaper commodity machines. It’s surprising, therefore, that within 5 years Sun would be catapulted to become the most successful company in the enterprise computing space, multiplying its value by 30 times, and surpassing its formerly much larger rivals like HP. It’s also surprising that, within a few more years, Sun would decline just as rapidly as it had risen. How could a middling manufacturer of workstations so rapidly become the darling of IT, only then to become the orphan stepchild?”

So, will Sun rise again? The author’s conclusion (to which I broadly agree):

The three factors underlying Sun’s prevoius ascent are permanently gone. The tech economy won’t likely boom again like it did in the late 1990s; Sun’s competitors won’t likely try to kill off their own platforms; and Intel and Microsoft won’t likely release entirely novel, untested versions of NT or Itanium. So, a repeat of the ascent similar to the one in the late 1990s is unlikely.

Furthermore, it’s unlikely that Sun’s low-end boxes will be able to compete on price/performance with the offerings from research-lean organizations like Dell. And it’s unlikely that Sun’s high-end boxes will be able to compete with offerings from massive, well-funded, technologically sophisticated companies like IBM and HP.

These facts have led some industry watchers to predict that in the long term, Sun is doomed. But if there’s any lesson to be learned from Sun’s history, it’s this: extrapolating from current trends is not a good way of predicting the future. Sun is a master of pulling tricks out of its hat. Sun has been written off before, and it prevailed.

Tags: Management

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