Dear Scott,
As an admitted software bigot, I’m glad to hear that you’re once again
planning to bet the future of Sun Microsystems on software.
I know you mean it this time, though this is at least the fourth time we’ve
heard this promise in recent years. I also know you’ve tried through
acquisitions (Forte, Chorus, and NetBeans, to name just a few) to make a go
of it in the past. And I realize that thanks to Sun, Java is an industry
standard, despite the fact that everyone makes money on it but you.
But having just spent the day on your web site, listening to interviews with
your new software chief, John Loiacono, and presentations by your former
software chief, Jonathan Schwartz, I think you need to give the new guy
something more to do than continue the strategies that got you where you are
today.
Here’s my beef… Sun’s vision of software glory has always been on the
technology side of the software stack. Of course, that makes some sense, as
Sun has always been a premier technology company. But software technology —
operating systems, development tools, application servers, systems
management tools, and the like — all come with a major handicap. They
become commodities so fast that pure technological excellence has little
differentiating power.
Remember when applications servers and portals were major strategic
differentiators, back all of four years ago? Now companies like SAP give
them away. The bottom line is that software technology is like fast food —
when a hamburger, fries and a Coke costs $2.39, most consumers will ignore
the fact that it’s not so healthy and opt for something that’s filling,
cheap and replete with good, if totally artificial, flavor.
And like fast food, what differentiates in rapidly commoditizing markets is
sales, marketing, and brand. These are all things that, when it comes to
software, Sun hasn’t shined at. Sun’s erstwhile competitors in software
technology — Microsoft, IBM, BEA, even the Open Source movement — have all
out-marketed, out-sold, and out-branded Sun for years.
Even if the alternatives are less nutritious, Sun has always had trouble
staying ahead of the commoditization curve in software technology.
Ironically, there’s one place in the software world where Sun was once
positioned for major brand awareness, and that was in enterprise software.
Back in the late 1990’s, as SAP, Oracle, and PeopleSoft were forging their
leadership positions, the inside consensus was that Sun servers were the
best platforms for running high-availability ERP systems. This was internal
scuttlebutt only, because HP and IBM had forged strong marketing alliances
and were pushing their respective Unix servers heavily into these markets.
Sun’s response to this opportunity was, to say the least, underwhelming. And
Sun’s position as the best hardware vendor for the ERP market became an
industry secret that was, eventually, completely forgotten.
The point is that the enterprise software market does a relatively good job
of staying ahead of the commodity curve. Enterprise software, when it
combines vertical functionality and deep business expertise, is by
definition commodity-proof, at least for long enough to make a difference in
a vendor’s bottom line. And enterprise software does so in part by helping
to commoditize other sectors of the software market.
Hence the presence of apps servers, portals, integration services, and the
like in SAP’s software stack. It’s no coincidence that much of what SAP
includes as a loss-leader for its applications sales are pieces of
technology that Sun has been hoping, vainly, would help it become a software
powerhouse.
So, Scott, it’s time to get real about enterprise software. Which means
getting real about moving out of the commodity stack and into the
value-added side of the equation.
Here’s my advice: take that money you just got from Microsoft and go spend
it on enterprise software. Buy some applications, acquire the service
companies that can implement them, and start owning some of the Java
solutions that everyone else is building on your dime.
There’s no alternative but to get on the enterprise software bandwagon. Or
I’ll be writing this same column two years from now. Only this time it will
be an epitaph.
Joshua Greenbaum, a principal with technology and marketing consultancy Enterprise Applications Consulting of Daly City, Calif., is a columnist for Earthweb’s Datamation, where the column first appeared.
