Sun's utility pricing and Solaris roadmap lead last ditch recovery plan

Rethink IT, July, 2004

Sun may still be under intense pressure, with the long term viability of its core server business living under large question marks, but it is determined to come back with guns blazing. In the past few months, we have finally seen the company starting to show signs of having a clear strategy to commercially exploit its crown jewel, Java. Its truce with Microsoft may have taken the edge of aggression off its Linux/Java challenge to Windows and .Net, but recent updates to the Java Desktop and Enterprise systems show that challenge has not been abandoned.

Then last month, we saw something of the old Sun Microsystems with one of its super-launch events. There is something stage managed these days about Sun's 'power' announcements, when it drops a dozen amazing new technologies in your lap in one go, but then again the company did promise to "shock and awe" us, and is trying to live up to the claim.

It introduced new software, new systems and services, which it says will pave the way for self managing and utility-based infrastructures.

It also added a new set of identity management products and put what it calls self-healing capabilities into its latest edition of its Solaris 10 operating system

UTILITY PRICING

Major announcements included Sun's version of pricing system like IBM's 'on-demand' and those which go towards a subscription pricing model and usage-based pricing, which come bundled with Preventive Services options.

Sun also brought out Utility Computing for StorEdge Systems, a pay-for-use storage idea, again inspired by what IBM has been doing in the market. Sun says it delivers storage capacity when it is needed at an attractive, predictable price. The cornerstone of the offering is the Sun StorEdge 9980 array, based around a base cost of $.02 per megabyte per month, bundling in hardware, software, services, installation, and its Platinum support, within that price.

Subscription pricing, which Sun already offers for software, can help the company generate more predictable revenue and bring it into line with Hewlett-Packard and EMC on cost of ownership of its storage. It has relied heavily in recent months on creative pricing approaches both to reawaken interest in its products and to entice customers. Its Java Enterprise and Java Desktop systems use a per-employee model. Companies purchase JDS by paying $100 per year for each employee in the company, regardless of how many actually use the software. The price drops to $50 per employee per year if a company also buys Sun's Java Enterprise System server software.

Much of the new dynamism at Sun is coming from its newly promoted president, Jonathan Schwartz. In his previous role as head of software, he was responsible for introducing the per-employee charging model and is a great believer in pricing plans--as opposed to price per se--as a key differentiator.

Other vendors have been introducing pay-as-you-go pricing plans as part of a wider industry push towards utility computing, but Sun's initiatives have been among the most unusual, such as an offer to let governments in developing nations pay for software based on the number of citizens and how developed the country is.

With its new Preventive Services offering, Sun aims to give customers a set of multiple services covering Sun gear at a single price. The package, designed to help customers avoid problems in the first place through diagnostic checks, is priced based on factors such as the number of data center employees and the complexity of the hardware and software in use.

In addition, Sun said customers who meet and sustain performance goals in their data center will be offered discounts of up to 20% off long-term services subscription costs.

According to Sun's calculations, its utility computing approach permits a customer using 30 terabytes of capacity to pay roughly a third of what they would if they purchased or leased the storage gear--although they are tied into contracts.

Michael Isaac, analyst at researcher Saugatuck Technology, told News.com that the system lacked flexibility. "By locking in a commitment for, say, three years to get $1.95 per gigabyte per month, Sun's subscription pricing still falls considerably short of the true vision of pay-as-you-go pricing where you can scale up or down, depending on need," he said.

Critics accused Sun of showing how far on the defensive it has been thrown by IBM, with its subscription moves, saying these are too late and more about public relations than real benefits. But supporters countered, claiming that the primary objective may be to drum up excitement about its products, but selling storage by megabyte could still be genuinely good for users, saving on upfront costs and giving greater control of storage spending.

"Sun didn't move in the direction of greatly expanding its use of subscription pricing models when the company was in robust, good health, at the top of the dot in dot-com boom," said Jonathan Eunice, an analyst with researcher Illuminata.

SOFTWARE

There is a new Java Enterprise Developer promotion featuring Solaris, development tools and a bundled Sun AMD Opteron-based development server, the Sun Fire V20z, for three year's at just $1,499 a year.