---------------------------------------------------------------------------- Miscellaneous Observations About Sun SunFLASH Vol 21 #15 September 1990 ---------------------------------------------------------------------------- The following article contains material of an explict, boastful, marketing nature and may not be suitable for all readers. Parental discretion is advised! Seriously, I have included extracts from an Alex Brown Inverstors report on Sun Microsystems and three short articles from magazines. -flash Contents Alex Brown Report Extracts INFOWORLD IPC Comparison CRN WORLDWIDE RISC Market FORTUNE - Sun's Growth -------------------------------------------------------------------------------- Alex Brown Report Extracts -------------------------------------------------------------------------------- Sun is leading supplier of computer systems based on the network-based architecture of workstation/server platforms. Most successful supplier of $10,000-$20,000 computer systems in history > $625M per quarter > 28,000 units per quarter Sun has best chance of achieving $10 billion or more of all the systems suppliers that have emerged during the 1980s. The "Commercial" Network Computing Market worldwide installed based of "commercial" 32-bit desktop computers capable of supporting operating environments such as OS/2 or UNIX will grow to over 40 billion by later 1990s. (There are about 30 million DOS-based PCs installed in the past eight years). Average price per seat is likely to exceed $5000 (including servers, desktops and networking). Accumulated "commercial" network computer installed value should grow to more than $200 billion with annual sales to reach the level of $40-$50 billion by the late 1990s (hardware only) Workstation/server product architecures differ dramatically from earlier PCs and minicomputer architectures: - high performance desktop computers ( 5 - 10+ mips, 8-16+ Mb RAM) - integrated high-speed local area networking - integrated high resolution graphics ( 1 Million pixels, 1000 by 1000) - collection of shared network based services including: database access, file storage/backup, remote communications and peripheral support - fully developed o/s supporting virtual memory, multi-user, multi-tasking and flexible machine configurations. -------------------------------------------------------------------------------- Workstation/Server Revenue Market Forcast ($Millions - estimates) (worldwide by marketm RISC and non-RISC) 1987 1988 1989 1990 1991 1992 1993 TOTAL 2,480 4,300 5,910 8,060 10,600 13,800 18,000 technical 2,260 3,870 5,090 6,660 8,400 10,400 12,800 commercial 220 430 820 1,400 2,200 3,400 5,200 -------------------------------------------------------------------------------- In last quarter, Sun's international revenues were greater than domestic (53% vs 47%). Some Sun commercial wins: Banca Popolare di Bergamo: Italian bank intends to automate all banking functions with Sun SPARC-based platform strategy. 18 month plan calls for roughly 1800 systems (over $18 ) London International Financial Futures Exchange (LIFFE): another SPARC based automated trading pit. Over 1300 SPARC systems Mitsubushi Bank: trading system based on SPARCstations. Other Sun based trading systems are installed at other Japanese trading firms We beleive that Sun's strategy of forging a new industry platform standard is already begning to pay off -- giving Sun a two or more year lead over its closest competitors. By commiting to SPARC, Sun has time-to-market advantage of RISC Price/performace curve. By collaborating with AT&T to delviver UNIX System V Release 4, Sun has gained the benefit of broad customer support and leveraged development of a robust, stable network-based operating environment. By commiting early to these technologies, Sun has leading edge products that actually work. Our forcast of RISC-based workstation/server shipments clearly demonstataes Sun's jump on the competition. With 180,000 to 190,000 SPARC based units antcipated to be sold during 1990, or a 68% unit share of an otherwise fragmented market, SPARC has taken an early lead: RISC Workstation/Server Shipment Forecast Summary (Worldwide by microprocessor type - shipments in thousands) Shipments Unit Share 1989 1990 1989 1990 Total SPARC 47.8 187.0 58 71 Sun 47.0 151.0 57 57 Solbourne 0.8 4.0 1 2 Toshiba 21.0 8 Others 11.0 4 Total MIPS 18.1 54.0 22 17 Silcon Graphics 7.5 12.0 9 5 Digital 8.5 26.0 10 10 MIPS 2.1 3.5 3 1 others 4.4 2 HP-Precision 6.3 10.0 8 4 IBM-RT/RS-6000 4.8 8.0 6 3 Other 6.0 14.0 7 5 Total Shipments 83.0 264.9 100 100 SPARCware applications April 89 500 July 89 1000 November 89 1405 January 90 1500 March 90 1700 June 90 2000 Sun's commitment to build a multi-company juggernaut behind its hardware/software standards has never been more resolute. The burgeoning "commercial" market for workstation/server systems is likely to be the largest computer growth oppertunity of the next decade. Unlike the earlier "technical" marketplace, the "commercial" market cannot be won by Sun alone (or by any other solitary systems vendor for that matter). Sun has been most successful, to date, in attracting the support of numerous Pacific Rim suppliers (most notably Toshiba). We believe additional U.S. and European support is likely - particularly once Sun-compatible products begin shipping in volume late in 1990. SPARC SYSTEM VENDORS Arix Datatech-Taiwan Definicon FROX Fujitsu Goldstar ICL Megatek Metaflow Mission Cyrus Mizar Seiko Instruments Solbourne Computer SPEC Tatung-Taiwan Toshiba Xerox Dangers of Cloning ? It would be a mistake to view the development of the Sun-compatible business as closely analogous to the PC-cloning phenomena of the mid-1980s -- there are simply too many differences. Consider the following: (1) PC-clones: Mid-1980s "clones" arrived when tecnical innovtion by dominant supplier had largely disappeared. New products were delayed until April '87 when PS/2 family was introduced Sun-compatible: Sun ensures that product cycles remain very short and technology content is consistently high. Any "clone" manufacturer that is unwilling to make substantial ongoing investments in unique product capabilities in unlikely to survive. (2) PC-clones: Indirect distribution channels were already in place. These channels were independent of major supplier and many dealers were sharply at odds with major supplier. Sun-compatible: No independent channel exists. Sun sells directly and through a group of VARs. As we believe that a PC-industry style channel is appropriate for network computing products, we believe that Sun "clone" vendors will have to invest in building their own sales channels. (3) PC-clones: By time "clones" arrived, buyers where spending $2,000 to $6000 (per seat) and they often were price sensitive. Sun-compatible: With the average buying decisions running at $250,000 or more (for networks of workstations/servers) we suspect that the average Sun customer considers many other factors in addition to price before committing to a supplier (such as service, support, and vendor stability). (4) PC-clones: With few buyers developing customized applications, PCs have always been a relatively low value added market. Self-installed shrink wrapped software packages with fairly simple functionality have, by and large, dominated the application mix. Sun-compatible: While we believe that shrink warp software PC packages will be quite important, high value-added custom applications will be critical as well. Suppliers will have to develop relations with both in-house software developers and third-party software vendors -------------------------------------------------------------------------------- INFOWORLD IPC Comparison -------------------------------------------------------------------------------- Here's an interesting survey posted on p.97 in the July 30, 1990 issue of INFOWORLD. I should mention the survey starts with the base price of each machine, then adds monitors, memory, etc. just to bring it up to the level of the IPC. The final price with upgrades is shown on the bottom line. ----------------------------------------------------- Sun's Sparc-Station IPC to Take On Apple, Compaq, IBM ----------------------------------------------------- Sun Apple Compaq IBM SS IPC Macintosh IIfx Deskpro 486/25 PS/2 70/486 Base Price $9,995 $10,969 $13,999 $12,990 Memory 8MB, floppy, 4MB, floppy, 4MB, flopppy, 4MB, flopppy, 207MB hard disk 160MB hard disk 120MB hard disk 120MB hard disk MIPS 15.8 8* 11-15* 11-15* Expansion 2 S-Bus slots 6 Nubus slots 7 EISA slots 3 MCA slots RAM upgrade 8MB** 4MB($999) 4MB($1,998) 4MB($2,999) Video card 8-bit** 8-bit($648) 8-bit** 8-bit** Color display 16"** 13"($999) 16"($1,999) 13"($1,620) Keyboard extended** extended($299) extended** extended** Mouse ** ** Microsoft($100) PS/2($99) Networking Ethernet** Ethernet($699) 3Com($350) 3Com($350) ONC/NFS** ONC/NFS ONC/AUX TCP/IP/NFS (in A/UX) (in SCO) ($771) Operating sys. Sun OS/Open A/UX, Multi- SCO Open IBM AIX & X Look ** finder($695) Desktop($995) Window($809) Total price $9,995 $15,238 $19,441 $19,638 * estimated ** included -------------------------------------------------------------------------------- CRN WORLDWIDE RISC Market -------------------------------------------------------------------------------- The following is from Computer Reseller News, June 25th, 1990, p. 14: "WORLDWIDE RISC WORKSTATION/SERVER MARKET BY MICROPROCESSOR, VENDOR" 1989-1990 Unit Shares 1989 1990 WORKSTATIONS SERVERS WORKSTATIONS SERVERS TOTAL SPARC 61% 45% 74% 50% Sun 61 41 61 38 Solbourne 0 4 1 5 Toshiba 0 0 9 0 other 0 0 4 7 TOTAL MIPS 22 21 16 24 Silicon Graphics 11 3 4 5 Digital 10 10 10 10 MIPS 1 8 1 5 other 0 0 1 4 HP-PA 6 13 3 10 IBM RT/RS-6000 5 9 2 7 other 6 10 4 10 -------------------------------------------------------------------------------- FORTUNE - Sun's Growth -------------------------------------------------------------------------------- From FORTUNE, August 13, 1990. Sun Microsystems is ranked number one in the 25 America's fastest-growing companies (Between 1984 - 1989. The list excludes spinoffs from established companies and companies that owe their growth to a single acquisition) The following is the partial list showing the computer industry companies. Company Principal Business Sales (mils) Growth Rate 1984 1989 1984 - 1989 (avg) ------------------------------------------------------------------------- 1. Sun Computers $39 $1,769 114% Microsystems ... 7. Computer Computer Software $85 $1,030 65% Associates ... 11. Compaq Computers $329 $2,876 54% Computer ... Note: Sun is the only company with the 3-digit percentage average annual growth from '84 - '89. Excerpt: "... Top-ranked Sun Microsystems, like a handful of other companies that appear, won its place by staking out a claim in that realm of perpetual growth, electronics. ..." "... Sun Microsystems' job ride was interrupted last year when it hit a $20 million quarterly loss..." "...In growth-speak, Sun was suffering 'product transition syndrome', an ailment that afflicts many young organizations as they try to broaden their scope. Chief Executive Scott McNealy responded by imposing cost controls and streamlining Sun's organization, which had proliferated willy-nilly. The remedy worked: According to analyst's estimates, Sun finished its 1990 fiscal year in June with sales up 39% to $2.4 billion, and profits up 89% to $115 million...." ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Sunflash is an electronic mail news service from Sun Microsystems, Ft. Lauderdale, Florida, USA. It is targeted at Sun Users and Customers. For additional information about SunFlash send mail to info-sunflash@sunvice.East.Sun.COM SunFlash is distributed via a hierarchy of aliases. Try to address change requests to the owner of the alias that you belong to. 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