Innovation Alive and Well at Sun Microsystems
Posted on Wednesday, June 10, 2015
Five years after being acquired by Oracle, Sun Microsystems continue to produce enterprise-class SPARC systems. Sales volumes may have slid significantly over the course of the previous decade, but so too has the product range in recent years.
When Oracle announced the deal back in 2010, many commentators expected Sun’s hardware division to be dropped quite quickly – although they were generating $6.7 billion in sales, mismanagement saw the business haemorrhaging cash on every front. As a software-only business, it made sense for Oracle to take control of the Java environment and offload everything else.
Instead Oracle took the opportunity to rationalize the Sun product line, focusing solely on the most powerful SPARC-powered high end servers. And the gamble seems to have paid off – hardware revenues totalled $5.7 billion last year, only marginally behind Sun’s last reported figures.
Back in 2010 the deal also revealed something about the wider hardware industry. Not only was hardware particularly difficult to sell at profit, some vendors like HP were rumoured to be running at -15% profit on sales. These costs were recouped by boosting the cost of OEM support and maintenance servers, shoring up profit margins through the back door.
In the meantime, Sun Microsystems continues to turn out high-end servers designed for the most intensive computing workloads. The new M7 processor range is expected to deliver Sun’s first 1000-core machine some time this year, showing that innovation is alive and well, and that Oracle have a vision for the future of their hardware business.
The only problem for Oracle will be lengthening hardware refresh cycles. As long as existing systems can be maintained in peak operating condition with a third party post warranty maintenance agreement, there will be little need to replace them with a new machine. A cost-saving win for customers could cause Oracle more problems at some point, in the near future.