Sun’s
New Star: Orion SW Strategy
This week Sun had its Annual Analysts’
Briefing. Regrettably,
we were unable to get to San Francisco for the fun.
Thanks to the wonders of technology, however, we were able to
join in much of the festivities via webcasts and downloaded
presentations.
We’re going to skip the usual Sun
saber rattling about how premium-priced brand-name UNIX systems are
better than Wintel boxes or Linux (although Sun sells that, too,
nowadays). We – and
many financial and industry analysts have been concerned for some
time about Sun’s business model, with its focus on high-end, high
margin hardware, in a marketplace which places increasing emphasis
on software and services.
Orion is a software-centric strategy
which Sun hopes will allow it to create synergy between its hardware
platform and its customer base and its collection of operating
system, middleware, and some application software.
It is about three things:
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Making it easy to buy, implement, and
manage its software
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Making its software stack cheaper than
its competitors
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Offering more integration between its
middleware offerings than Sun believes other vendors offer.
Look at Orion as a concept, rather than
a shipping product, because nothing’s shipping yet.
In fact, nothing is priced yet.
We do know what Orion is – or rather,
what is in the roadmap.
The Orion Roadmap
Orion is three things:
a software system, a completely integrated offering, and a
new licensing model. Each
of those pieces has, in some sense, a roadmap of its own.
Orion’s software system
includes:
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the Sun ONE middleware
components (eventually all of them)
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Sun Clustering Servers
(for High Availability)
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Sun Grid Engine
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Sun’s N1
Provisioning Server and N1 Data Services Server
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Sun’s Streaming
Media Server
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Sun’s operating
systems: Solaris
(SPARC and x86) and Sun Linux
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Sun plans to provide a
completely integrated offering, making use of common components
(which won’t have to be duplicated), common install and uninstall
methods, and so far. Extensive
engineering is being done by Sun developers to provide the necessary
integration. (We’d
think it’s worth noting, since there are lots of integration
announcements going on just now, that this is infrastructure
integration, quite different than the application and data
integration promised by, for example, an IBM EAI scheme.
Think of them as going on at different layers of the system.)
Orion is based on a new
licensing and business model. The idea is to move from current licensing schemes, where
each product has a different basis (by user, by transaction, by
processor size, by number of processors, etc., etc.) and to move to
a single common and predictable uniform pricing model.
Sun hasn’t figured out yet what that might be but they’re
talking high level, suggesting that the right unit might be per
retail store or per manufacturing plant.
That sounds bold, but scarcely practical, unless they mean to
negotiate a custom price for each customer.
All stores or all manufacturers are not created equal and an
average would not be fair to either buyers or Sun.
Sun intends to make this a
subscription based model, including upgrades and maintenance
(support). We mentioned
this idea to some Microsoft execs we happened to be talking to this
week and they chuckled that they hoped Sun’s experience with
subscription based pricing would be better than theirs.
The Pricing Question
Actually, Sun is trying to avoid making
guesses here and formulating its new pricing plan in consultation
with its customers. We
spoke with Ingrid Van Den Hoogen, Sun’s Director of Strategic
Marketing, a few days after the announcement.
She stressed that Sun is still in the talking stages on
pricing, agreeing that during the Q&A following Orion’s
announcement some reporters misunderstood SW VP’s Jonathan
Schwartz’s remarks that there would be pricing information in 60
to 90 days, to mean that prices would be announced by then.
Sun means to have more details in 60 to 90 days, as they
continue to discuss the concept with analysts and customers, but do
not expect to announce Orion pricing until later this year.
Also, there is no intention to force fit
customers into a single pricing model.
Sun intends to deliver all new systems
with Solaris or Sun Linux with a full set of software.
Whether the customers use it or not, and whether and how they
pay for it, is a customer decision.
Customers can continue to follow traditional pricing models,
paying for a single (or a few) Sun software servers; they can move
to Orion pricing and license everything for a single annual price.
Eventually, Sun hopes to offer a metered model, more like the
Utility or On-Demand pricing models already offered by IBM and HP,
but they believe that this is several years away.
We expressed interest in just who Sun
expected to sell the Orion offering to.
Sun expects to offer it to all of their current customers,
including all of their hardware customers.
They are hoping that a Try and Buy trial plan will encourage
customers to try their software and ultimately move toward the Orion
plan. They do agree
that for some customers, such as data centers and service providers
they may need a different business model than for others.
Sun is convinced that many IT managers
are so concerned about the cost and complexity of integrating
software that they will be happy to give up choice in order to have
Sun take over (and solve) this problem. Sun’s Jonathan Schwartz stated that a customer going with
Orion would see his price for software (we think it’s for software
but it might be for the price of software and integration, it’s
not clear) drop to 10% of its former cost.
Of course, we’re wondering how he know that for a product
that hasn’t been priced yet!
He also told members of the press that a
full Orion suite would cost about 50% of the cost of a Microsoft
suite. (Should we
bother stating the obvious – that most of Sun’s competition for
server software isn’t Microsoft it’s a host of middleware
vendors like Oracle, BEA, and IBM?)
We do note that both IBM and Microsoft have strong ambitions
for what IBM refers to as the “mid-market” and what Microsoft
refers to as the low-end of the Enterprise market – which might be
what Sun has in mind. We
don’t envy them aiming for the available slice in that battle.
We have lots of questions:
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Customers are notoriously slow to change
software. (We are always amused, but never surprised, to hear
about customers using 20 year old applications.
If it isn’t broken, we’re not fixing it, is a
popular war cry.) In
these days of tight IT spending, we’d guess that changing
applications, except for mission critical items, gets a very
low priority.
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We’ve always found Try and Buy to be a
delusionary marketing tactic.
Customers have to invest big bucks to actually try
anything out – they may have to learn or buy new skills and
they surely have to move things around, perhaps running them
twice if this is really a no-risk test.
It’s not free. Very
few customers do this unless they’re pretty sure they want
to go ahead.
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Sun is selling into a lot of hot markets
where it isn’t even an active contender.
Yes, there are a lot of Sun SPARC boxes in corporate
data centers and service providers.
And when we ask what’s running on them we get answers
like Oracle data bases and BEA application servers.
Customers tend to buy what they think is best for
important infrastructure and applications. Everyone is offering more and more integration and better
systems management these days; we’d guess that relatively
few customers will give up their software of choice for
temporary or incremental improvements.
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Orion Fits Into Sun’s Quarterly Release Schedule
Like the other Sun products
discussed earlier in February, Orion plans to use a systematic
quarterly release approach. It
will start off with a web services release for Fall 03, with an
early access release this summer.
(In case you’re confused as to what a web services release
is (I was), Sun means Directory Server, App and Portal Servers, and
Web Integration.) Sun
will add additional function every 90 days so that by the Fall of
2004 the Orion release will be complete, including Email,
calendaring, messaging, and so forth.
The Orion Deployment
after Web Services will start with Enterprise Infrastructure
and then move on to Orion Developer – with Studio and an Orion
MadHatter release with StarOffice and a variety of open source
software including Mozilla.
We’d say definitely stay tuned for
more details on pricing, availability, and market reaction.
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