IBM’s proposed takeover would be the last nail in its coffin, says Ratan lal Bhagat of 4Ps B&M
Dark and dense clouds are engulfing it from all directions. And the Sun of Silicon Valley does not appear to have very strong chances of making it beyond this rough weather. Moreover, a ‘big blue’ monster is just waiting to devour it.
“The economic downturn continues to weigh on our customers, especially those that contribute to our traditional high-end businesses,” said Jonathan Schwartz, CEO of Sun Microsystems while declaring Sun’s results for the quarter ending March 2009. The player has registered heart shattering successive losses of $1.677 billion and $209 million for the last two quarters. One of the primary reasons is that around 40% of Sun’s total sales are generated from companies in the financial services and telecom domain. The ongoing financial crisis has seriously crippled the funds of its present and prospective clients, thus forcing them to pull back on technology spends.
However, that is not the only reason for the dismal performance of Sun Microsystems. The Santa Clara, California-based software giant has been beset by problems galore, ranging from slowing demand leading to falling revenues, product slip-ups, growing competition and a stock that has lost three-quarters of its value in the last fiscal year alone.
It all began when this dotcom darling was unable to make its much touted hardware to software shift. Moreover, competitors took the advantage of Intel chips and Windows software to push cheaper machines into the market, a strategy ex-CEO Scott McNealy rigidly refused to deploy.
“Strategically, we continue to focus on two core areas - creating the world’s largest, and fastest growing developer communities – for whom we build the products, services and technologies on which they’ll build their products and services. And secondly, we deliver compelling commercial offers in the form of systems, software and services to those deploying applications – across a diversity of industries – through commercial subscription, services and optimised system products,” explains KP Unnikrishnan, Regional marketing director- Emerging markets(LATAM, EMMA, Greater China & India), Sun Microsystems. Surely, Sun has relentlessly poured billions of dollars into new products for a decade to overcome the dot-com fallout, but with its high-cost business model, many products are taking way too long to hit the market and revive its fortunes.
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Source :
IIPM Editorial, 2009
An Initiative of
IIPM,
Malay Chaudhuri and
Arindam chaudhuri (
Renowned Management Guru and
Economist).
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