Path: utzoo!utgpu!news-server.csri.toronto.edu!cs.utexas.edu!tut.cis.ohio-state.edu!uccba!uceng!minerva!dmocsny From: dmocsny@minerva.che.uc.edu (Daniel Mocsny) Newsgroups: comp.arch Subject: Sun's Competitive Strategy (Was: Re: P1754 Message-ID: <6749@uceng.UC.EDU> Date: 20 Nov 90 19:15:10 GMT References: <1990Nov16.225515.494@zoo.toronto.edu> Sender: news@uceng.UC.EDU Organization: University of Cincinnati, Cin'ti., OH Lines: 88 In article roland@CS.Stanford.EDU (Roland Conybeare) writes: >I believe Sun hopes to enlarge the market for SPARC machines by inviting >competition (this seems like an extraordinary action to me!). Sun's move is extraordinary, in that it shows insight and courage almost unheard of in the computer industry. The alternative, however, can be observed failing just about everywhere people are still trying it. Attempting to sustain high profit margins on obsolete architectures via proprietary lock-ins just doesn't work in the long term. Eventually your customers are losing so much money that they are willing to undergo the agony of porting to somebody else's box, no matter how hard you try to make it for them. >Sun wins if it keeps market share & SPARCs become commonplace. On the other >hand Sun may lose to superior manufacturing. I suspect that Sun realizes the only way to insure that it maintains its superior manufacturing is to expose itself deliberately to competition. Top management at a company can't simply order the whole company to become more competitive. Everybody in the enterprise has their own personal agenda, and if line managers don't feel a pressure to run a tight ship, they will always find something else to do. By insuring that competition will exist, Sun sends a convincing message to every employee: produce, or the party is over. While putting the company in a sink-or-swim position might seem insane, it is probably the only strategy that has a chance in the medium-term. Because every computer company is in a sink-or-swim position if you look down the road a few years. Victories are won and lost by the cumulative result of seemingly insignificant differences in growth rates. For example, during the 19th century, the USA had an industrial growth rate 1% higher than that of Great Britain. As a result, after 100 years the USA went from a banana country to replacing Great Britain as the world's leading industrial power. Things happen faster in the computer industry. No company can afford to become complacent simply because it can sell something today that nobody else has. Within a couple of years, everybody else will be selling something better. Look at the proprietary minicomputer lines showing flat sales today. You are seeing what happens when everybody at the company believes proprietary lock-ins will protect them from having to compete. Lock-ins can work in the short run. But they only buy you a few years in which to dig your nice, comfortable grave. Sun also understands that customers don't buy computers to decorate their desks, but to run software. Therefore, the more software a computer will run, the more valuable it is to the customer, period. Since the vast majority of computer buyers do not write their own code, the price and availability of software for a particular computer is at least as important as the computer's underlying technical merit. And the price and availability of software depends almost entirely on one thing, directly or indirectly: the size of the computer's installed base. By inviting in the cloners, Sun is insuring that the total number of SPARC systems installed will be higher than if Sun marketed them exclusively. The cloners won't merely cannibalize Sun sales; they will also penetrate new markets that Sun would not have reached on its own. As a direct consequence, more software developers will target this market. That will increase the value of the architecture to the consumer, further stimulating sales. The overall size of the market will then be much higher. Sun will have to compete harder for market share, but at least it has insured that 10 years from now it will still have a market to compete in. Consider where Apple computer would be right now if it had made cloning the Mac easy. Consider where DEC would be if it had made cloning the VAX easy. Maybe in chapter 11 :-), or maybe fighting to hang onto a share of a still-thriving market. Instead, the handwriting is on the wall for the proprietary lines. Eventually they will simply get swamped in a flood of cheap PC clones, SPARC clones, etc., which will be doing everything they can do, for less. Proprietary lock-ins don't work in the long run. The whole organization adapts to easy sales and high margins, and starts getting fat and slow. Not to mention spending more money on its legal activities than on creating value through superior engineering. But even the best legal talent in existence can't persuade customers to spend more than they have to. -- Dan Mocsny Snail: Internet: dmocsny@minerva.che.uc.edu Dept. of Chemical Engng. M.L. 171 dmocsny@uceng.uc.edu University of Cincinnati 513/751-6824 (home) 513/556-2007 (lab) Cincinnati, Ohio 45221-0171