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Sun CEO On Razors And Blades 233

Kadin2048 writes "In an interview with BusinessWeek online, Sun Microsystems CEO Scott McNealy sheds some light on the company's new business model and future direction. In particular, he said that Sun's recent open source moves were part of a new strategy, where 'The software is the razor. The razor blades are the servers.' The move was called a huge risk by BusinessWeek, and it would put Sun at odds with the more traditional Microsoft-esque model with high per-seat or per-server software licensing costs and use commodity PCs and servers, which may not go over well with investors. But after having seen its stock slide and users flee for Linux and Windows, they arguably have little to lose. Perhaps the most interesting development to Slashdot readers is that in an effort to draw new developers to the platform, Sun is offering a deal that seems torn from a cell-phone company playbook: offering a "free" Ultra 20 Opteron workstation if you sign up for a $29.95/mo, 3-year service contract."
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Sun CEO On Razors And Blades

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  • The future? (Score:5, Insightful)

    by protohiro1 ( 590732 ) on Sunday December 04, 2005 @03:49PM (#14179589) Homepage Journal
    This is definetly what apple does in the consumer space. The cost of selling additional copies of software is zerom but hardware costs a certain minimum amount. If anything makes sense as a loss leader it is software that won't lose you more money the more you sell. Then of course your value proposition becomes hardware quality. Your hardware is better, it costs more (higher margin). So far this is working for apple.
    • Re:The future? (Score:5, Insightful)

      by Anonymous Coward on Sunday December 04, 2005 @05:18PM (#14180085)
      Apple's strategy isn't really the same. You can't (legally) get a free copy of OS X or iLife, and Apple is only giving away source code to selected software. Apple is really selling a package: the hardware, the operating system, and the applications all combine to create their product. Sun is trying to establish a model where they sell hardware and give away the software. Maybe it'll work out for them. I hope so. Sun makes good stuff, overall. It's tends to be high quality but expensive, and many companies just look at the bottom line and want to buy the cheapest stuff at the expense of quality.
  • by phorest ( 877315 ) * on Sunday December 04, 2005 @03:52PM (#14179606) Journal
    It would seem you buy the hardware first @ $360.00 then the rest is all gravy (software and such) @ $720.00. Retail, the system is probably about 800.00. Still not a bad deal.
    • Sun bills you in 1 year increments PROVIDED your credit card has an experation date > 3 years in the future. Otherwise you get hit for it all at once.

      Its $360 for the first year, and any additional hardware or upgrades are billed in the first installment beyond the base system price. This includes billing you for a keyboard if you order one!
  • by Halfbaked Plan ( 769830 ) on Sunday December 04, 2005 @03:55PM (#14179618)
    It's absolutely indecent, calling something a Sun Ultra 20 that doesn't even have an UltraSparc processor in it. I am tempted to erect a catapult across the road from Sun headquarters and hurl Ultra 5 workstations at them.

    Sun truly is 'going the Carly way' it seems. Stripmining their credibility to 'preserve stock value' for a bit longer.
  • by postbigbang ( 761081 ) on Sunday December 04, 2005 @03:55PM (#14179620)
    This goes further into the model proposed by the post: 8-cores in the CPU (one FPU for the eight) and 32 discrete threads, all in a 2U server box. This is based on UltraSparc, but there's Solaris 10, and the port of gcc to it for seductive app transfer. The whole idea is a hardware play.

    It makes me wonder why there must always be this gulf between hardware and software vendors. The most successful models meld them together handsomely into devices like iPods, mobile/pda devices, etc. This thick-thin shift is so insane. At the end of the day, we just want to do work, entertainment, and something useful with the devices we buy, and the location of what's going on is increasingly irrelevant. But perhpas this is what (F)OSS software will get for us, an army of coders coupled to an army of blade vendors, with dumb devices at the edge.
    • But perhpas this is what (F)OSS software will get for us, an army of coders coupled to an army of blade vendors, with dumb devices at the edge.

      I disagree with the "dumb devices" bit; that's too cynical. We can have devices at the edge that are only as smart as they need to be. This enables tons of networked apps that can relay dynamic information: news, airline flight status, and so forth. Increasingly, these tools are built into clients that aren't even web browsers (e.g. RSS readers, OS X dashboard wid
      • Thick v thin (Score:3, Interesting)

        by postbigbang ( 761081 )
        Maybe the correct phrase is a hegenomy of devices, as this is what we have.

        To extend your checking flights metaphor, I can do this on my mobile, my PDA, my notebook, or a terminal somewhere I don't own (not that I would). Each device is running something different. The mobile runs Symbian; the PDA runs WinCE, the notebook runs MacOS, and only heaven knows what the public terminal has, probably a Windows session.

        At the core on the thick side is (statistically, anyway) either Apache/Tomcat, or IIS/something r
        • At least in the telecom world there is a lot of that "behind the curtain" sneakiness that needs a lot of horsepower to make the stuff customers see work.

          Just as an FYI, the digital world isn't all web servers talking to clients.

          On the back-end B2B side there are seems to be more and more XML+HTTPS over private network links between a service provider (any service, think PayPal + X service for instance) and any number of external vendors. External vendors are doing anything from billing, to content deliv

  • by putko ( 753330 ) on Sunday December 04, 2005 @03:57PM (#14179630) Homepage Journal
    This deal looks neat.

    But Sun has a whole line of Opteron-based computers.

    Does anyone have anything good/bad to say about their entry model, the X2100?

    Here's the review I saw: http://anandtech.com/systems/showdoc.aspx?i=2530 [anandtech.com]

    I like the idea that it is an off-the shelf minimal server.

  • by jurt1235 ( 834677 ) on Sunday December 04, 2005 @03:58PM (#14179633) Homepage
    3 years is $1,078.20.
    That is for the basic model. For something with real specs, 2GB ram, faster processor, and a Dual layer DVD burner, you have to pay a $1,800 premium.
    For that money you can buy a Dual core 2.3 GHz Power G5 and have change left.
    Your real profit here: The Apple looks a lot better, and is still cheaper.
    For the sad design of this Sun box, they should charge Dell prices, this since they are competing with Dell with the Fire server line anyway.
    • Consider: (Score:5, Insightful)

      by imsabbel ( 611519 ) on Sunday December 04, 2005 @04:22PM (#14179737)
      Some people pay more for _just_ a service contract.
      Without any hardware whatsoever.
    • Dell sells a dual core Opteron server? I would like to look at one, where can I? Oh that is correct, they don't make an Opteron server, and the Xenons can't compete at this time.

      Dual core G5? Oh you mean the end of life PPC Macintosh...

      So I guess it is between HP, Sun and IBM for major server vendors that sell Opteron servers. Well HP/Compaq is out of the question because they are in Microsoft's back pocket and they will kill any serious threat to that market. Just look at what their view of Blue-Ray i
    • Actually, I got the middle model (2.2GHz / 1G / 80G / nVidia NVS 280) for ~$1300, it's a nice box. The video card supports dual-head displays, 1G of memory (expandable to 4G) is tolerable, and the SATA drive is nice and quick. And the best part is -- it's quiet. It's probably just me, but my last box had noisy fans and drives. This thing, while not silent, is probably several orders of magnitude quieter (my guess is it's probably about 40dB).

      That said, if I had it to do over today, I'd get a 20" iMac.
      • Nice to know it is pretty quiet. That was a big worry of mine. I know the G5s very well, and they are nice and quiet all the time (In use as graphics (so stereotypical) workstations). I do not know the dBs, just quiet, no sound at all audible.

        The Sun IDE is IIRC downloadable from java.sun.com for free with the J2EE suite.

        This kind of comparisson usually comes down to who has more performance per $. The added value of software suites, and ergonomics will become more important in the next years. I have m
    • Since when does a work station need to be pretty? All it has to is preform!
  • So the question is...is this model something they're trying to pigeon hole themselves into, or will it actually work. This business model in particular is despised by consumers who are today acutely aware of how vile it is for the consumer and how great it is for the company.

  • by intmainvoid ( 109559 ) on Sunday December 04, 2005 @04:03PM (#14179656)
    The software is the razor. The razor blades are the servers. Together they're slicing up Sun's stock price.
  • by Council ( 514577 ) <rmunroe@gma i l . c om> on Sunday December 04, 2005 @04:07PM (#14179676) Homepage
    Sun is offering a deal that seems torn from a cell-phone company playbook: offering a "free" Ultra 20 Opteron workstation if you sign up for a $29.95/mo, 3-year service contract.

    Oh, come on, we can see right through that. It's just another sleazy attempt by Sun to acquire money in exchange for goods and services.

    The nerve.
  • by WidescreenFreak ( 830043 ) on Sunday December 04, 2005 @04:17PM (#14179707) Homepage Journal
    Let people bitch about how you can build your own for a cheaper price. The Ultra 20 is still the better deal as far as I'm concerned.

    * 3 year warranty on both hardware AND software (for which you have to pay extra with just about all other vendors)

    * One of the most mature operating systems out there

    * One of the most mature 64-bit operating systems out there (TRUE 64 bit)

    * The only commercial system that is certified to run the three (arguably) most popular operating systems - Windows, Solaris, and Red Hat

    Considering all of those factors, I still consider the Ultra 20 to be a hell of a bargain.

    The only catch is that is it NOT $29.95 per month. You pay in three annual installments. I posted an open letter to Sun on a web site that I write for criticizing them for continually advertising $29.95 a month when they actually do not offer such financing. Jonathan Schwartz actually responded to it on his blog stating that financing and legal are the slowest segments of any corporation to respond to new ideas and that the Ultra 20's marketing was rushed. Just an FYI on that.

    Still, I'd have that Ultra 20 replace my Sun Blade 100 at home in an instant if I had the finances at the moment.
    • Considering what I've spent on service contracts over the last several years, that's not a bad deal. The box only has to flake once, and it's probably paid for itself. This presumes, of course, that your downtime is worth something. I bought desktops from IBM and HP for the last job because we got a three-year service contract with them, and paid slightly more (total) for hardware only for PIV/Xeon-based machines.

      The best part of a three-year contract is that the company is betting that it won't see t
    • I wouldn't call Solaris 9 and 10 for x86 mature, they're new. Solaris on Ultrasparc is mature. There are some definite issues for porting software from one to the other, and who knows how well vendors of commercial software will do at that?
  • Ok, ok, let me get this straight: The server is the computer, and the server is the razor blade that is on the razor, which is the software. So, the computer, which is the server, which is the razor blade, runs the software, which is the razor. I'm confused. Either Sun is trying to shave using the handle as the blade and the blade as a handle, or I missed something...
  • We're always alluding to this business model of giving away razors but making money off replacement blades.

    But, does that business model actually work? I mean, for razors?

    I mean, when I go to the store to get more blades, I always forget what specific type of handle I have. It's not something I really spend the effort to commit to memory. So I just don't buy new cartridges, putting it off until next time.

    Or, I just buy the disposable safety razors instead, which are cheaper anyway. Having to remember

    • Razors and egos (Score:3, Interesting)

      by fm6 ( 162816 )
      The "safety razor" model is easy to misunderstand, because the term doesn't mean what it used to back with Scott McNeely (and I) learned to shave.

      Back in the 19th century, all men shaved with straight razors. Then in 1905 King Gilette patented a disposable-blade razor [about.com]. It was called a "safety razor" purely for marketting reasons. Its main selling point was that you never had to sharpen the blade — when it got dull you just threw it out and bought a new one.

      And yes, they did sell the handles at a l

      • Everybody know about Total Cost of Ownership, and aren't going to be impressed that they can get a Sun box for free. If Sun is going to make all its money off of software and customer service, then they should stop making computers altogether, and leave the hardware headaches to others.

        It's the other way around. They are giving away the software (open sourcing it) with the intention of making money on, presumably, well built hardware. It makes sense, since there is room for innovation in big server instal
        • My mistake. Still, I find it hard to believe that Sun can create software that's so good, people will buy Sun hardware just to run it. And if it's open source, they probably won't need Sun hardware to run it.

          As with those Gilette razors, the product doesn't stand or fall on little pricing/marketing gimmicks. What matter is the basic value it creates for the customer. Sun hardware is superior, but not superior enough to justify its cost. And playing games with the way you sell the hardware isn't going to c

          • Still, I find it hard to believe that Sun can create software that's so good, people will buy Sun hardware just to run it. And if it's open source, they probably won't need Sun hardware to run it.

            You're probably right; in the razor-and-blades analogy it would be like buying Schick cartridges just so you could get to use their awesome rubber-padded handle.

            However, the value is in the innovative hardware that Sun is traditionally good at. I can see customers buying the hardware for its quality, and the awes
            • Apple has a tiny market share. Maybe being a small player works for them, but it's not going to work for Sun. If Sun becomes to the server market what Apple has long been to the desktop market, they're doomed.
      • What's really weird about this is that it sounds like SUN considers the SOFTWARE to be the Razors...

        Which might be the case a la Google, but in that case, the blades as it were need to be cheap or somehow locked into the razor, which in SUNs case neither applies...
  • by Jeff DeMaagd ( 2015 ) on Sunday December 04, 2005 @04:40PM (#14179819) Homepage Journal
    "razor and blade" would qualify as an overused analogy for marketing, though it kind of fits, because the software is free or cheap and the hardware is sadly exorbitantly priced.
  • Styptic? (Score:2, Funny)

    by kybred ( 795293 )
    The software is the razor. The razor blades are the servers.

    What is the styptic pencil, then?

  • Their free software bundle advertising of

    Sun Studio
    Sun Java Studio Creator
    Sun Java Studio Enterprise

    is quite ridiculous, considering that if you visit their website you will notice that it is already free ;-)
    http://developers.sun.com/prodtech/devtools/free/ [sun.com]


    PS. I wonder if they have fixed the swing clear type issues.

  • Ouch! I know you don't like him too much, but this is just cruel.
  • by NZheretic ( 23872 ) on Sunday December 04, 2005 @05:01PM (#14179983) Homepage Journal
    Taking a leaf from Gillette's playbook [theonion.com]:

    By Scott McNealy
    CEO and President,
    The Sun Corperation.
    December 2 2005

    Would someone tell me how this happened? We were the fucking vanguard of Unix servers in this country. SUN was the server to own. Then the other guy came out with a open source Linux based servers. Were we scared? Hell, no. Because we hit back with a little thing called Solaris. That's three layered enterprise system and J2EE application server. For portability. But you know what happened next? Shut up, I'm telling you what happened--the bastards went to GCJ and JONAS. Now we're standing around with our cocks in our hands, selling three layered enterprise system and J2EE strip. portability or no, suddenly we're the chumps. Well, fuck it. We're going "open source".

    Sure, we could go open source next, like the competition. That seems like the logical thing to do. After all, three worked out pretty well, and four is the next number after three. So let's play it safe. Let's make a thicker Java layer and call it the Solaris enterprise environment. Why innovate when we can follow? Oh, I know why: Because we're a business, that's why!

    You think it's crazy? It is crazy. But I don't give a shit. From now on, we're the ones who have the edge in the open source game. Are they the best a man can get? Fuck, no. Solaris is the best OS a man can get.

    What part of this don't you understand? If the BSD license is good, and the GPL license is better, obviously Sun's even more restrictive open source lisence would make us the best fucking system that ever existed. Comprende? We didn't claw our way to the top of the Unix game by clinging to the posix industry standard. We got here by taking chances. Well, open sourcing theo whole Solaris entrprise system is the biggest chance of all.

    Here's the report from Engineering. Someone put it in the bathroom: I want to wipe my ass with it. They don't tell me what to invent--I tell them. And I'm telling them to stick two more abstraction layers in there. I don't care how. Make the JVM so thin it's invisible. Put some on the management interface. I don't care if they have to cram the new enterprise layer in perpendicular to the other four, just do it!

    You're taking the "Operating" part of "Operating System" too literally, grandma. Cut the strings and soar. Let's hit it. Let's roll. This is our chance to make platform history. Let's dream big. All you have to do is say that five blades can happen, and it will happen. If you aren't on board, then fuck you. And if you're on the board, then fuck you and your father. Hey, if I'm the only one who'll take risks, I'm sure as hell happy to hog all the glory when Solaris becomes the development tool for the U.S. of "this is how we program now" A.

    People said we couldn't go to three. It'll cost a fortune to develop, they said. Well, we did it. Now some egghead in a lab is screaming "Five's crazy?" Well, perhaps he'd be more comfortable in the labs at Microsoft, working on fucking VISTA. Secure platform, my white ass!

    Maybe I'm wrong. Maybe we should just ride in Microsoft's wake and make game consoles. Ha! Not on your fucking life! The day I shadow a penny-ante outfit like Microsoft is the day I leave the operating system game for good, and that won't happen until the day I die!

    The market? Listen, we make the market. All we have to do is put her out there with a little jingle. It's as easy as, "Hey, developing with anything less than J2EE is like hacking lines of VB off with a dull hatchet." Or "You'll be so smooth, I could snort lines off your firewall." Try "Your source is going to be so friggin' soft, someone's gonna walk up and tie a goddamn Cub Scout kerchief around it."

    I know what you're thinking now: What'll people say? Mew mew mew. Oh, no, what will people say?! Grow the fuck up. When you're on top, people talk. That's the price you pay for being on top. Which SUN is, always

  • by xant ( 99438 ) on Sunday December 04, 2005 @05:08PM (#14180024) Homepage
    They're giving away the servers *and* the software. I guess it's the service contract that's the razor.

    Given Sun's business acumen the last decade, I expect them to start giving that away too. Not that I'd be happy about that. Competition is good, so competitors shooting themselves in the foot is bad.
  • Sun is offering a deal that seems torn from a cell-phone company playbook: offering a "free" Ultra 20 Opteron workstation if you sign up for a $29.95/mo, 3-year service contract."

    Here are some of the cellphone-like terms from that contract:

    - Service plan includes up to 1 Trillion CPU instructions per month, absolutely free.

    - Extra CPU instructions are billed at $0.08/Billion peak, $0.03/Billion nights and weekends.

    - Free instructions do not include floating-point operations. All floating point instr

  • Anyone who's tried to write a Java program that uses minimal hardware resources already knows that Sun views "the software as the razor; the servers as the blades."
  • "Sun is offering a deal that seems torn from a cell-phone company playbook: offering a "free" Ultra 20 Opteron workstation if you sign up for a $29.95/mo, 3-year service contract."

    Goddamn. This nearly had me fall off my chair. Then I went to SUN's site and realised that this offer is for the US customers only and not applicable to EU customers :(
  • by onyxruby ( 118189 ) <onyxruby@comc[ ].net ['ast' in gap]> on Sunday December 04, 2005 @05:20PM (#14180098)
    Give them credit for this, it's a pretty decent deal actually. The only thing I don't like though is the fact their educational skills package is $3000. I'd like to learn Sun Solaris, and the one school I found near where I live that teaches it closed the very day I was to start class. I live one of the most tech heavy / college heavy areas in the US to boot!

    Message to Sun, if you want more IT people on your hardware and software, you need to make it easier for people to gain those skills (you have just made it easier to gain the hardware). Books only go so far, you have to play with it, learn it and use it to know it. I'm interested in learning Sun, but no *nix shop is going to let me in the door no matter how many years of IT experience I have with just a book education. People want education, so make it easier for the lay person to afford it, ok?

    The best advocate for your product is the IT person. The best way to get the advocate is to make sure that the IT person can learn you product. I've been looking for a reasonably affordable option to get trained on Sun for years, most IT people can't talk their contract house into paying for your clases. Novell, Microsoft and Novell all have readily available classes in community colleges and the like, Sun, where are you?

    • The $3000 price is for instructor-led training, I don't see Red Hat, IBM, etc. offering that for free.

      As for the teach yourself route, their online documentation at docs.sun.com is actually pretty good. You could also subscribe to the ACM for a hundred bucks or so, which gets you free access to a bunch of Sun's online training for Solaris, Java, and many of the software packages they're now giving away (see http://pd.acm.org/full_listing2.cfm [acm.org] ).
  • by thpdg ( 519053 ) on Sunday December 04, 2005 @05:20PM (#14180103) Journal
    "Payment method for this promotion is credit card only. The credit card used at time of your Sun Store purchase must be valid for 3 years to allow for proper 2 and 3 year payment installments. If credit card used is valid for less then 3 years, card will be billed in full for all 3 years at the time of delivery."

    Make sure you check the expiration date on your card before you order!

  • Gilette files suit against Sun Microsystems citing trademark infringement (confusion on part of the customer) and also for infringing upon their business model. When token minority Faux News corrrespondent Virginia Washington questioned Gilette CEO regarding the validity of the suit, he responded "It is well known that we established the business model by selling inexpensive razors with expensive proprietary razor blade refills. It is clear that Sun Microsystems is attempting to capitalize our trademarks a
  • by SEE ( 7681 ) on Sunday December 04, 2005 @06:54PM (#14180638) Homepage
    Look, yes, SPARC hardware kicks the crap out of commodity x86, sure. But it's not, as I understand it, nearly that far ahead of IBM POWER hardware. The biggest problem with POWER was that you had to use AIX or Linux, both with definite deficiencies relative to Solaris.

    But now there's OpenSolaris, and OpenSolaris is being ported to IBM RISC hardware at no cost to IBM. IBM will then be able to pick it up, polish it, offer support contracts, and provide you with a complete Solaris-on-quality-RISC solution, without a dime going to Sun.

    I'm not saying it will happen, but it's certainly a reasonable possibility, something Sun should have a plan for in its business case. If IBM starts offering Solaris-on-RISC, how is Sun going to avoid losing market share -- and thus resources for further development -- to IBM? What's its differentiator?

    In short, does Sun actually have a plan? Or is it in "We must do something; this is something; therefore we must do it!" mode?
    • Ultrasparc doesn't really "kick the crap" out of comparable systems based on other hardware. bang-per-buck is lower, and hot swappable component systems can be had on many architectures including x86. So we can only go to 8 way on x86 now, enterprise software now does active-active clustering or has a distributed model for all the common uses, whether dbms or middleware or portals. In other words, so what if an UltraSparc scales to 128 way, when for one third the price a pile of x86 boxes can give more p
  • Here is a great thing that small business owners would love. I mean, the opportunity to start with little capital and get the needed services over three years.

    There's only one problem -- Sun's market isn't small businesses (small IT). Sun's market isn't medium-sized IT, either. Sun's market is only large enterprise... which is dominated by Windows and (now) Linux. Could someone correct me if this is not the case?

    Whether in business or pleasure, I have really wanted to use Sun stuff... I really do. I ju
  • At last a sun workstation that doesn't look entirely like crap. All the other stuff appears to be standard x86 fare - allthough it probably isn't just that - but at least the box looks decent.
    With everyone going all comodity and even Apple switching to x86, with computers powerfull enough for allmost any job this little visual detail stuff is more important than ever.
    If they actually manage to build an market a solid x86 setup that earns itself a reputation for stability and bottleneck-free x86 performance

  • See, the money men can't comprehend the concept - so it must be bad.

    This is Bill Gates' thinking.

    Much as I think Sun is doomed no matter what it does, I give kudos to the company for at least trying, as opposed to Microsoft that will NEVER understand what is going on as long as Gates and his henchmen are running the company.
    • Much as I think Sun is doomed no matter what it does, I give kudos to the company for at least trying, as opposed to Microsoft that will NEVER understand what is going on as long as Gates and his henchmen are running the company.

      Microsoft's market cap: $300 billion and profitable
      Sun's market cap: $14 billion and bleeding money

      Now look at the balance sheets. I can only assume you have some strange definition of "understanding what's going on" that the rest of the market doesn't use.
  • The free version has a ATI Rage 8 meg gfx card, 512 megs and a 200 dollar Opteron.

    It costs around 800 for a dual AMD x2 4200 with 1 gig ram and same HD and Nvidia 5200 if you shop on pricewatch.

    But you do get 3 years of support for hardware and software. 360 out of pocket now, but id have to upgrade the GFX card right away.

The unfacts, did we have them, are too imprecisely few to warrant our certitude.