Analysis of Sun Microsystems Inc

ANALYSIS OF SUN MICROSYSTEMS, INC.

Case Analysis

By

Debra Taylor

BA210 - Principles of Business and Budgeting

Harvey D. Rothenberg, Ph.D. - Facilitator

October 27th, 2001

Analyze Sun's competitive environment.

Sun Corporation had been described as "the last standing, fully integrated computing company..". They manufacture and develop from the chip thorough to the computer's operating system, and more. In 1998, they expanded within the application development market to develop a cross-platform information sharing language called JAVA. Today, Sun is a global Fortune 500 enterprise network computing corporation.

Sun has 4 primarily competitors in the technical and scientific manufacturing markets. They have additional competitors in the delivery of services, manufacturing of desktops and software development. Having few competitors places Sun in an oligopoly market.

Sun has many strength's in the market place. One, is that no customer accounts for more than 10% of their revenue for 3 years running. Another, is the diversity of it's competencies. They hold 20% of the market share in UNIX server revenues and 20% of the market share in disk storage. They also hold greater than 50% of the market in workstations, 25% of the market in server software, and now 60% of the email market with their America Online partnership.

Another strength of Sun lies in it's leadership. Scott McNealy is admired even by his competitors. He has been described as having "rigorous financial management" skills. Couple that with his strong manufacturing background, it makes him a fierce competitor. Yet, strong leadership isn't enough and Scott recognized that by keeping smart leadership around him to carry his plans and enthusiasm down his functional management line.

For all of Sun's strengths against their competitors there are also weaknesses. They have become more dependent in recent years on their suppliers. Timely delivery is crucial for their future competitiveness, and anything less than optimum performance from any of their suppliers could have a serious impact on their operations.

What are Sun's distinctive competencies?

Sun's competencies in the 1990's had been primarily hardware and software. However, their website 'www.sun.com', displays they have moved beyond the hardware and software arenas and their current competencies are in architectures, solutions, services and documentation.

Architecture support is necessary when a company requires support in designing software that runs on multiple platforms. An example might be a customer service application that collects data from a hand held device, requires downloading to a midrange server, then moves up to a mainframe for processing do to huge amounts of data. This is an example of a solution to a hardware issue.

Solutions are generally packaged software solutions, though not always. Sometimes solutions may involve both software and hardware changes. Services and documentation may also be part of a solution that Sun offers to their customers. A Sun solution may encompass their providing a service in the form of a trained Project Manager, to a company buying documentation, to support software in a different language, to expand to an international market. Solutions generally involve providing whatever it takes to solve the customers request. Solutions like these gave Sun a competitive advantage over their competitors.

Sun's manufacturing of hardware includes desktops and servers, chips, boards, peripherals and network storage servers. While their software includes operating systems, interfacing software like Java was a contributor to increased sales. In 1998, Sun began installing Java language on it's servers. This was when Java propelled them as a breakthrough opportunity, and soon became a marketing strategy..

What strategic management decisions need to be made and how should the decision-making process proceed?

Strategic management planning is the process of developing and maintaining a proper balance of organizational resources and the companies market opportunities. Sun faced the 'dramatic expansion of the Internet's web...", when in 1994 Scott McNealy faced the challenge of resource and market balance by being "..the company that had been faster in making the transition compared with its UNIX rivals IBM and HP." Marketing strategy decisions include one or more of four basic market opportunities. These opportunities include market penetration, market development, product development, and diversification.

Since strategic planning requires a marketing strategy, let's analyze Sun's specific target market. Their vision statement "vision is for a networked computing future driven by the needs and choices of the customer.." specifies a clear marketing strategy. For their target market, they specified 'network computers'. Thus, they have penetrated the market with their networks. However, because the IT industry is very competitive, the market for Sun's networks, services, and products is competitive. Having only a few major competitors, Sun is oligopolistic. This forces Sun to continuously develop, introduce, and deliver new products to retain and grow their customer base. This strength in the market place is demonstrated by their continuous top 5 position in network development. Their weakness is that they fail to meet new product development and diversification of products.