Sun Microsystems Inc., aiming to jump-start its growth, Tuesday will give new details about a major overhaul of its software strategy. It also plans to take the wraps off new server computers and several dozen other new products later this week.
The new strategy comes as Sun kicks off its customer conference in San Francisco. The Santa Clara, Calif., company is simplifying its pricing and regrouping its software portfolio into just six major product groups, focusing on the server, the desktop, mobile devices, utility computing, the developer, and cards that use Java, Sun's programming language. Customers will pay a per-user fee for some of the software, compared with more complex and ad hoc pricing for hundreds of different software products previously.
"Taking out cost and complexity for the customer is the bottom line," said Mark Tolliver, Sun's chief strategy officer. By putting in place new pricing for software, "it takes us above a pure transactional business, and it will give us some predictable and recurring revenue."
The moves are part of Sun's latest attempt to revive growth. The once-highflying maker of servers, which are the back-end computers that run business applications, has been hit in the past few years on the low-end of its product line by competition from low-priced servers based on Intel Corp. microprocessors and either Microsoft Corp.'s Windows software or the Linux operating system. On the high end, International Business Machines Corp. and others are winning by emphasizing their consulting services.
In February, Sun revealed it was reconfiguring its software offerings, under an effort code-named Project Orion, but was short on details. Wall Street has been skeptical that a change to Sun's software strategy will make a difference to the company's bottom line. Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., said most of Sun's customers buy Sun for its hardware, not its software. What's more, infrastructure software currently generates only several hundred million of Sun's annual $12 billion or so in revenue, he said, which is "too small a base to be transformational."
Sun's Mr. Tolliver, however, said software is crucial in driving sales of more servers and other products. Software also has "higher margins than the systems side of the business," he added.
In particular, Sun Tuesday will unveil a bundle of infrastructure software products that it is calling Sun Java Enterprise System. The offering, which will include integrated software for directory services and other elements, will come ready for installation on one digital video disc. Sun will charge a customer $100 per employee per year for unlimited usage of the software, with a cap at 120,000 employees.
Sun also is unveiling its new desktop software, formerly dubbed Project MadHatter and now renamed Sun Java Desktop System. It will come with its own browser and the latest version of Sun's productivity suite, StarOffice 7. It also is priced at $100 per employee, though customers who purchase Sun Java Enterprise System can get the desktop software for $50 per employee.
The company also is launching a new set of developer tools, dubbed Sun Java Studio, for $2,500 per developer or $5 per employee as an add-on to the Sun Java Enterprise System. In addition, Sun is expected to talk about software products it has on tap for Java cards and mobile devices. The company also will launch new software to help companies run their data centers, as part of its N1 utility-computing initiative.
Wednesday, Sun also will unveil new midrange servers based on its Unix operating system and microprocessors, as well as a new workstation machine. Mr. Tolliver says some of the products cost 50% less than servers with similar capabilities made by rivals such as Dell Inc.
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