Sun Still Mines Gold from Unix Focus

FRAMINGHAM (01/28/2000) - Sun Microsystems Inc.'s single operating system strategy - Unix - is continuing to pay off.

Sun recently announced another strong quarter, in which it saw profits rise 30% to $353 million on revenue of $3.6 billion for the period ended Dec. 26. During the same period the previous year, Sun had profits of $273 million on revenue of $2.8 billion.

In contrast, rival IBM saw revenue from its high-end Unix servers dip sharply in the fourth quarter, as did Compaq Computer Corp. Compaq reported a 5% decline in enterprise product revenue, which includes its Unix servers.

Sun is clearly benefiting from the clarity of its Unix-only message, said Jonathan Eunice, an analyst at Illuminata Inc. in Nashua, N.H.

While companies such as Hewlett-Packard Co., IBM and Compaq pitch multiple operating systems and hardware platforms, Sun has made headway by focusing on driving home the advantages of Unix.

One result: Sun's high-end Unix server market share for systems costing more than $1 million grew to 40% in the third quarter of 1999 from 29% a year ago, according to International Data Corp., in Framingham, Mass. Sun has maintained its postion as the leading shipper of Unix servers for 10 quarters in a row.

Sun's marketing also helps. "It's not that their products are always the best.

... They are just very adept at how to bring them to market and in creating an expectation and a desire for their products," Eunice said.

Sun's experience in selling to telecommunications companies has helped Sun establish itself as a leading supplier of infrastructure technologies to Internet application service providers and hosting services, said Joyce Becknell, an analyst at Aberdeen Group Inc. in Boston.

"Sun gets it," Becknell said. "In trying to help service providers sell more services," Sun also benefits from increased server sales, Becknell said. "If you look at HP, Compaq or IBM, they are still trying to figure out how to handle the service provider market."

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