Re: Extropians Investing in the Future

Natasha V. More (
Tue, 24 Dec 1996 00:18:08 -0700 (MST)

I am forwarding James Rogers' post to me, with his permission:

>I can give you more information than you probably want to know. I will give
>you a general breakdown of their products, market presence, management, and
>future directions.
>The primary product of Sun Microsystems is the Sparc series workstations.
>These workstations are *very* popular and make up the majority of the
>workstation market. Over 50% of hosts on the Internet are Sparc-based.
>Solaris (the OS on Sparcstations) has very strong network capabilities.
>Sun Microsystems has had difficulty maintaining the performance of the Sparc
>architecture. Among the workstation vendors, the Sparc series processors
>are by far the slowest and weakest. This is a trend that they do not show
>any signs of reversing. In fact, Sparc is becoming one of the weakest
>architectures in any processor market. Example: The top-of-the-line Sun
>CPU is the Ultrasparc-1 running at 170MHz and has a system price starting at
>$20k. The top-of-the-line Intel CPU is the P6 running at 200MHz and has a
>workstation price of $5k. The performance of these two systems is virtually
>identical. There is an emerging trend where companies are moving from the
>traditional workstation hardware to the increasingly powerful Intel-based
>and PowerPC-based workstations at a fraction of the cost. There is
>significant evidence that "consumer" architectures such as Intel and PowerPC
>will significantly surpass Sparc performance within two years.
>Sun Microsystems has several excellent software products, most notably
>Solaris 2.5 and the Java related software. Solaris will remain a popular
>commercial OS as long as SparcStations are being produced, and is generally
>considered to be a very good OS. Sun's ownership of the Java environment is
>an excellent position, strategically.
>Although Solaris has been ported to other platforms, it is generally only
>popular on the Sparc architecture. As mentioned above, the decline of the
>Sparc architecture will be followed by a parallel decline in the Solaris
>Java hardware:
>Sun is developing processors that will run Java bytecodes natively. When
>available, these processors will most likely be very popular for embedded
>systems, smart terminals, and Internet appliances. Properly managed, this
>product could be extremely profitable for Sun Microsystems in the long term.
>Sun Microsystems has enormous market presence. This alone has driven the
>high sales volume of their workstations. This market presence is also what
>allowed them to push Java on to the market. Their two most valuable assets
>right now is their market presence and Java. Without these, they would not
>have a long-term future.
>Sun Microsystems has significant management problems. They have
>difficulties meeting release deadlines. Workstation orders are routinely
>delayed due to insufficient parts and a lack of parts suppliers. They are
>pretty famous for being late on their obligations. They are also very
>liberal with their spending. They piss away money in enormous quantities
>with little accountability. A lot of people have made a lot of money off of
>Sun Microsystems by charging them absurd amounts for parts and services.
>They are to the Silicon Valley what the Department of Defense was to the
>defense industry in the '80s; an enormous source of free money.
>Currently, Sun has enormous growth and profitability, although more by
>market forces than anything. The entire future of Sun rests on the future
>of Java. Fortunately for Sun, they own the rights to a significant
>percentage of Java-related technologies, and have many willing licensees.
>The development of Java-native hardware will also give Sun a dominant
>position in the future of Java related technologies. If they are not
>successful in pushing their position in the Java market, their market value
>will erode significantly over the next few years.
>Bottom line:
>Odds are better than even that Sun will remain profitable for the long-term,
>and that they will show strong growth for the short-term. Their long-term
>growth is questionable however, since the growing Java market may be offset
>in the long-term by a declining workstation market.
>Feel free to address any additional questions or questions about the above
>to me.
>-James Rogers