Sun Microsystems Corporation’s Analysis

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Table of Contents

Introduction
Competition in the computer server industry
Elements of Sun’s strategy
Primary factors that led competitive challenges in Sun Microsystems
Recommendations

Introduction

Sun Microsystems is an American Corporation founded in 1982 with its headquarters in Santa Clara, California in the United States of America. Sun Microsystems was a creation of Andy Bechtolshein who was by then a graduate student at Stanford University. The name SUN was derived from the initials of the Stanford University Network. The company specializes in offering computer servers, workstations, and storage software and information technology services and is one of the largest software firms in the United States with numerous overseas branches including the United Kingdom, Japan, China, and the larger European continent.

Immediately after few months of its inception, the company’s shares began to rise supported by strong infrastructural growth and long term research and development activities. There was a dramatic growth in revenue, profits, and expenses which were mainly attributed to surges in demand for web-serving cycles and venture capital.

The year 2001 was the beginning dry periods of inadequate revenues as the Sun Microsystems begun to record low profits, reduction in share prices and frequent departure of executive staff. The anticipated growth in online business did happen according to expectation and the ensuing result was that the online business had to be curtailed as valuable assets were auctioned. A time to review hardware strategy was nearing and soon afterwards the company had to change its course of business.

Competition in the computer server industry

The current economic environment in the computer industry is characterized by stiff competition. This is highly evidenced by the presence of large corporations offering many computer services including newly repackaged software’s in the market. These corporations include Able, Apple, Google, Yahoo, IBM, Dell, HP and etc. the servers consists of Firefox, Mozilla and the internet. Some of these corporations do not meet face to face. The industry is further complicated by the current advancement in technology as every firm is yearning for digital changes.

Elements of Sun’s strategy

Sun’s open software Strategy

Sun has an open vibrant and strong software technology that is visionary, futuristic and strategic. However due to the prevailing global economic climate, sun must tighten its buttons if it has to achieve a competitive strategy in the future. Sun is in the center of philosophical change in the business sculpt that defines the software industry. Increased competition has meant that there is a sudden shift from wholesome activities to service and support activities. Though the strategy might take a long period to materialize, the company’s future plan is to press on.

Java technology

Sun Microsystems relies heavily on the hardware and software strategies. In the recent past, the company has distinguished itself through provision and introduction of services and products like the Java platform developed by the company’s own staff in the early 1990s with the capacity to allow programs to function regardless of their device. During this period it was hard to imagine this technology picking up since many players in the industry had not got much information about such technologies and provided the company with strong competitive advantage. The java technology was hardware and operating system-independent and was client tailored.

It was a multifunction technology that comprised, Java programming language, Java virtual machine and Java application programming interface. All these functions were controlled by Java community process. As Java began to gain popularity, more revenues were recorded and the company seemed to be on an upward trend. However this followed a period of dry spell. Java technology is one of the most used technologies in the world.

X86-based systems

This was one of the first systems developed by Sun during its early period of inception; the technology had the capability of supporting DOS applications as well as operating systems. The company was reluctant to enter into X86 system due to little and insufficient margins. However, as time matured the company soon rethought its X86 strategy and instead unleashed major plans to integrate the system. X86 has become part of Sun’s core business plans.

The reports reveal that the company is in the process of achieving a double digit share of the X 86 servers. Sun has positioned a very gallant stake on x86, and the company will surface extremely lucrative and aggressive if it manages to implement its game plan successfully. The disadvantage is that if the game plan falls short so will Sun. In that case, Sun will get snowed under by hardware and software developments costs and rapidly quit the business.

Resource deficiencies and competitive liabilities that do appear to exist at Sun

Sun’s function server is lifeless in the market. Whatever its qualities, Sun’s application server is unknown in the marketplace. The company should discharge the application server under a GPL attuned license, then take a stern look at the open source application server site – there are other products that may not be ‘better’ but which have distant strong projections. Sun’s development paraphernalia are uninteresting in the marketplace. The world rotates around the two networks of Visual Studio and Eclipse. In a liberal economy, no single vendor is powerful enough to dominate a market niche. Sun’s threshold offering is good, but dreary. Sun’s portal technology is ‘OK’ – but lacks global competitiveness.

Assessment of Sun’s financial performance from 1996-2005

The poor financial performance actually began in 2001 occasioned by periods of unprecedented changes. As has been discussed above, poor performance was mainly attributed to the failure of online business and the immediate sale of hardware assets at undervalue. This hurt the company heavily. Following the subsequent years, Sun had to make necessary changes in its attempt to reduce operational costs and reposition itself well in the industry.

These changes led to massive staff layoffs. However in December, the share price continued a downward trend. In 2004 the company had to curtail its manufacturing business at their Newark California facility and concentrated its main focus on the major US-based business units at Hillsboro. In 2005 Sun recorded a profit of $ 19million. This was the first ever recorded profit in its financial years after a period of three years.

In general Sun’s profitability has not been stable for the last six years to 2005. This can be attributed to its hardware strategy and the inability to carry out expansive and aggressive marketing strategies. While Sun Microsystems remains conspicuous in the eyes of industry players offering dedicated products overtime, some of its products still remain unpopular in the market place. Failure to exhaust market potentials and subsequent reluctance to invest in research and development gave Sun’s competitors a leeway to reap from early advantages.

Primary factors that led competitive challenges in Sun Microsystems

Overreliance on hardware

Sun relaxed it muscles and showed a lot of reluctance in carrying out adequate market research in software. While the Microsoft giants, yahoo, IBM, Dell and HP invested heavily in the development of new software technology, sun capitalized on its Java hardware technology. When competition went overboard, Microsystems could not find a reasonable competitive space in the industry. This led to a decline of its online business and hence a reduction in market shares.

Inadequate marketing strategies

Sun went through a period of unraveled competitive rivalry in the software industry following its ineffective marketing policies that failed to inform clients about the existence of its products. Some of its products still remain unknown to clients in the market. This happens at a time when IBM and Dell are already bursting of multiple software products in the market. This has contributed immensely to the loss of market value.

Recommendations

Sun Microsystems is a large corporation with a considerable market share and with a good financial base. Despite the prevailing world’s largest economic and financial crisis, Sun Microsystems has the capacity of being the industry leader. According to the proposed business strategy, a lot more aggressive marketing needs to be incorporated. Many large organizations do survive harsh economic times because of adequate investment in research and development.

Sun should carry out more research in the software technology, the modern world has changed. Business transactions are more of software technology than hardware. Modern day managers need software to make current business decisions. This is the only way Sun Microsystems can be recognized in the competitive US and global world.

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