Sun Fights for High-End Market Share (
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HP and IBM grab more market share and once-mighty Sun is feeling pressure in the high-end market it took for granted.The news from Sun Microsystems' quarterly financial report was not
reassuring.
After talking about restructuring the company for more than a year to better
compete in the marketplace, Sun CEO Jonathan
Schwartz announced a $34 million net loss or 4 cents per share in the fiscal
third quarter, compared with a net income of $67 million or 7 cents per share
profit in 2007.
Those results could lead to Sun cutting up to 2,500 positions as it looks to
refocus its energies.
One source of this sudden downturn in the company's fortunes seems to be the
company's high-end systems business. When the results came rushing in May 1,
several analysts noted that the company seemed to have lost ground in one of
its most well-known product areas, specifically its high-end Unix server
business with its line of systems
based on SPARC processors.
In an analysis by Josh Farina of Technology Business Research, Sun shipped
4.6 percent fewer SPARC-based systems in the quarter compared to the same time
last year, which made it the sixth straight quarterly decline for the company's
high-end systems. At the same time, the company's shipments of x64 servers, machines
based on processors from Advanced Micro Devices and Intel, increased by 26
percent.
Overall, Sun's server revenue dipped 1.8 percent in the quarter to $1.47
billion.
While Schwartz and Sun executives blamed the slowing economy in the United
States for the company's current financial
woes—about 35 percent of its sales are in the United
States—Farina noted in his analysis that IBM
turned a profit during the same time period.
"Overall, Sun reports that the uncertain U.S.
economy led the company to post a year-to-year revenue decline in [the first quarter
of 2008]," Farina wrote in an e-mail. "However, I'm hesitant to
believe that the U.S.
economy was the key factor, since IBM, which
earns around the same percent of revenue from the U.S.,
at approximately 30 percent, posted 11.2 percent growth in [the first quarter
2008] and 6 percent growth in the U.S.
Sun appears to be losing to its competition."
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