When Sun Microsystems announced financial results this week, The VAR Guy had a moment of clarity: Sun is looking more and more like a larger version of Novell. And The VAR Guy means that in a complimentary way. Here's why.
Consider the parallels between the companies:
- Novell: The company had dominant position in server operating systems (NetWare) before customers went running to Linux or Windows on Intel. Jump to the present, and Novell has gained new life from fast-growing sales of its own open source platform (SUSE Linux). But a problem remains: More than 80 percent of Novell's revenue has nothing to do with SUSE Linux.
- Sun Microsystems: Sun had a dominate position in server platforms (Solaris on SPARC) until customers went running to Linux or Windows on Intel. Jump to the present, and Sun is seeking new life from fast-growing sales of an open source platform (MySQL). But a huge problem remains: Sun's legacy, proprietary, expensive technology that customers are abandoning. (Yes, The VAR Guy knows about OpenSolaris... but he isn't sold on it.)
Same Story, Different CompanyClearly, Sun and Novell face strikingly similar opportunities and challenges. The VAR Guy first mentioned the parallels in The Open Source 50 report, which tracks open source partner programs.
The VAR Guy believes Novell is at least six months to a year ahead of Sun in its transition to products that customers actually want. Sun's size is both an asset -- and a detriment -- as the company seeks to rebuild itself for the open source age. Generating more than 10 times Novell's annual revenues, Sun has a large direct sales team coupled with an established partner network that can aggressively promote MySQL and Sun's open storage efforts.
The Open Road, a blog from Matt Asay, notes that Sun appears to be making rapid sales progress with MySQL. But Sun's massive size is a major problem. CEO Jonathan Schwartz has to shed or reinvent massive pieces of Sun's legacy business.
Sunrise, Sunset?Alas, Wall Street can't agree whether Sun's most recent financial results were good, bad or indifferent. Take a look at this inconsistent coverage:
- Sun Soars On Profit Surprise (Barron's, January 28)
- Sun Skids to $209M Quarterly Loss (Associated Press, January 27)
- Sun Microsystems Tops Estimates, Sales Up (Smart Money, January 27)
- Sun Burned By Restructuring Charge (TheStreet.com, January 27)
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