How Should Khosla Respond to Computervision’s President After Hearing of Their Decision to Go with Apollo?

Action question

How should Khosla respond to Computervision’s president after hearing of their decision to go with Apollo? (i.e., What should he offer to Computervision?)

Vinodh Khosla needs to really convince that he can offer what Apollo can’t offer to Computervision which is a standard product (open source) with more power and that will be the future of workstations. Sun’s products will cost less to Computervision, and they can still charge the same price which will result in higher profit margin for Computervision. Khosla needs to tell the president that future of workstations is to have a standardized products which everyone can use according to their needs, and if the market demand changes in future Computervision will need to again order computers with different specifications adding to the cost. He should tell them that Apollo is a bigger firm and an industry standard, but Sun Microsystem is offering the future “Open Systems”. Sun Microsystem has been successful in selling its products to universities because schools do research and invest in the future which Sun Microsystems products has been able to do for schools. Vinodh has secured some funding because of consistent revenue from universities, but a confirm order from Computervision will enable Vinodh  to get more financing to complete the order. In addition, the Sun Microsystem had given the ability to software developers to develop any software on their machines which proves that it will be the next generation machines. If Computervision’s dream is to beat IBM and be a leading innovative company in the industry then the deal with Sun Microsystem would make sense and set the industry trend to follow.

Background questions

What should Khosla’s short and long term objectives be?

As we have learned in this class that there are five important things in a new opportunity, and as we can see that Khosla has found a market need for standard workstations with low competition, and a great five member team, but he needs to sell the standard workstations to OEMs to make it financially viable and scalable. For this reason the short term objective for Khosla is to get the deal done with Computervision and secure more financing to complete the order. The other short-term objective is to get into as many universities to get the credibility as Stanford would say Sun microsystems is the champion for future CPUs, and he should have other schools to say the same. Also, he need to get as many CPUs out even at cost just to capture the market share.

But if Khosla is able to close the deal with Computervision then the future for Sun Microsystems is very bright. In the long term, Sun Microsystem will be able to get more contracts from other OEMs if it becomes successful in completing the order with Computervision. As it is going to gain credibility to manufacture the computer of the future which everyone can use easily. For this reason, it is in the best interest of Sun microsystem and Computervision to form a joint long-term partnership. Sun needs to keep focusing on making the standard things which everyone can use, and not become specific in their requirements otherwise it will steer away from its mission. If Khosla wants to beat IBM and DEC then it needs to establish a sales force which can achieve its sales targets. No one else in the industry is doing what Sun microsystem has been able to do, and they are ahead of the curve from their competitors, but they need financing to expand their business which they will be able to secure if they are able to get a deal done with Computervision.