Severa: I'm hopeful about the promotion of Schwartz to COO. His first actions indicate that Sun is serious about getting to a break-even point and posting an operating profit again. We've had a couple of private sessions with him, and been favorably impressed. His longevity in that chair has to do with how quickly he can deliver positive operating results. We wish him well. It's a company that's bragged about cash generation while producing operating losses for too long in our opinion. He said some things about leading with software, about commoditizing hardware and opening the source code for Solaris and moving towards a utility model, pay as you go. Some of that is extraordinarily controversial and we think premature and may not be indicative of where the market is heading in the long run. Some of the things he says, particularly on the software side, represent only one side of the argument. We have a nice software business ourselves and talking to those vendor's CEOs, their views are not unanimous by any means in favor of utility computing. Sun has to have the ability to deal with its internal demons. When you're a company with contrarian intellectual property, you have to post operating profits to give the intended market the confidence and impetus to try your IP.
CRN: Is Schwartz the right person for the job?
Severa: He understands that the channel is the low-cost provider of high customer service and integration of technologies and products for the same end-user target base that Sun has. They will never have a large enough sales organization again to be all and do all. The channel is uniquely focused on Sun's value add and has been so historically. The channel enhances their ability to get to a sustainable break-even point. It has to do with leveraging indirect operating expenses, whether its outsourcing for internal processes or an indirect selling model, he gets that, in a way that even McNealy does not. Of all guys previously sitting in that Sun COO chair, he's come into the job understanding that without many qualms or misgivings.
CRN: You've mentioned your growth rate has increased 11 quarters in a row. Can you provide more detail?
Severa: Our growth rates the last four or five quarters are north of 30 percent. Two years ago, the federal government was leading the growth and commercial was a laggard. In the last four quarters, the public sector still is strong, but commercial has come back to life. Within that context, it's the enterprise boxes that are going through a renaissance. We've always done well with volume products, but Sun is a big box company. We had one of our largest months in history selling the E15000 in the month of May and have had good strength across the full server segment.
